Baroness Scott of Needham Market

Rosalind Carol Scott, having been created Baroness Scott of Needham Market, of Needham Market in the County of Suffolk, for life--Was, in her robes, introduced between the Lord Tope and the Baroness Miller of Chilthorne Domer.

Baroness Gibson of Market Rasen

Anne Gibson, OBE, having been created Baroness Gibson of Market Rasen, of Market Rasen in the County of Lincolnshire, for life--Was, in her robes, introduced between the Baroness Gould of Potternewton and the Lord Hoyle.

Burma: Operations of UK Companies

Lord Blaker: asked Her Majesty's Government:
	Why, and under what authority, they have pressed Premier Oil and other United Kingdom companies to give up their operations in Burma.

Baroness Scotland of Asthal: My Lords, the presence of reputable companies in Burma is not helping the democratic cause there. We therefore told Premier Oil, the largest UK investor, that we would welcome their moving out of Burma. We have no legal powers to force them to do so, nor do we seek any. We also tell British companies inquiring about Burma that we do not encourage trade with nor investment there.

Lord Blaker: My Lords, while we all deplore the human rights situation in Burma, how is it that the Government are pursuing this policy of economic sanctions against that country, when they encouraged Jiang Zemin of China, a country not well known for its observance of human rights, to visit this country and be received at Buckingham Palace? Why did the Government fail to support a resolution of the United Nations proposed by the United States criticising China's human rights record? What is the difference? Could it be that Burma is a small country and cannot hurt us very much, whereas China is a big country and could hurt us a lot? Is that an ethical foreign policy?

Baroness Scotland of Asthal: My Lords, we have said on a number of occasions, but let me repeat, that the difference between the two is clear. We are currently engaging in a critical dialogue with China. There is therefore a way forward so that we can hopefully improve the human rights situation in China, improve our relationship with the Chinese, and include China more in the international community. Burma turned her back on any such critical engagement. She refuses to engage with the international community. She refuses to recognise that there is any problem at all when it comes to human rights and will not bend her knee in any way to the lures that we put out for reasonableness. There is a clear difference between the two and therefore we have to maintain a difference in the way in which we approach the two nations.

Baroness Williams of Crosby: My Lords, I thank the Minister for her forthright answer. We on these Benches wholly agree with her. Will she confirm that the government of Burma are a military government that overthrew a clearly democratically-elected regime and to this day keep its leader under effective house arrest? Does she agree that, in pursuing an ethical foreign policy, it is necessary to try to win the support of major corporations in the private sector? Will she confirm that, as in the case of De Beers in Angola and Shell in Nigeria and Indonesia, it has often been the case that the help and assistance of large multi-national and other corporations has been sought on behalf of the British Government?

Baroness Scotland of Asthal: My Lords, I am pleased to confirm that. It is important for large, multi-national companies of this nature to assist us in this regard. The discussion with them is important and we welcome every occasion when they help us.

Lord Jenkins of Putney: My Lords, is my noble friend aware that it is widely known throughout the country that Burma is in a special position and that the Government's action in this matter is widely supported, generally understood and I hope will be persisted in until such time as Burma acquires, in the course of time (as one hopes it must) a government that are prepared to act as part of the international community? While it insists on putting itself outside the national community, one cannot expect, nor wish the Government to treat it as though it were the same as any other country.

Baroness Scotland of Asthal: My Lords, I welcome my noble friend's support. We have received support from all sides in this endeavour and welcome that support. It is a joint endeavour. We are working together with many partners and need everybody in every sphere to join with us.

Lord Elton: My Lords, is the government of the Sudan engaging in a critical dialogue with Her Majesty's Government on human rights matters? If not, why is it correct to seek to restrain human rights abuses in Burma by impeding the exploitation of oil in that country? Would it not be correct to do the same thing in the Sudan, to which we continue to send machinery for that purpose?

Baroness Scotland of Asthal: My Lords, as I said earlier, we are engaging with all those who will engage with us. The noble Lord knows well that we have to look at each country and decide which sanctions or movements will most effectively deliver a better quality of human rights. It is quite wrong for us to have a "one-size-fits-all" policy; regrettably, it does not. We must fashion the sanctions that we impose to the situation that pertains in each individual country.

Lord Faulkner of Worcester: My Lords, is not the answer to the noble Lords, Lord Elton and Lord Blaker, that if you wait for a perfect world you will wait for ever? In the case of Burma, there is no doubt that the action against oil companies could make a difference, bearing in mind that the construction of oil pipelines requires the removal of villages and a programme of forced labour? Indeed, this has resulted in the deaths of many local people at the hands of the SLORC troops. Is my noble friend aware that the firm stand she takes certainly has strong support on this side of the House?

Baroness Scotland of Asthal: My Lords, I am happy to hear that echo of support from my noble friend who sits behind me. Indeed, I hope that that echo will be found in front of me, notwithstanding the comments that have been made by some noble Lords opposite.

Lord Howell of Guildford: My Lords, we can all agree that Myanmar has a brutal and undemocratic regime. It is quite understandable that HMG should want to be as distant as possible from it. However, I am advised that other countries, which take the same broad view about this repulsive team, still retain informal links with Myanmar. For example, the United States has welfare programmes in the country and, of course, Japan took part in the ASEAN meeting that was held in Myanmar. Indeed, other neighbouring countries of ours retain links with the country through private enterprise. Can the Minister say why we are different in that respect? Are we sure that we have got the balance right between isolation, which is understandable, and constructive engagement, which is our policy in other areas?

Baroness Scotland of Asthal: My Lords, I hope that the House will allow me the privilege of welcoming the noble Lord, Lord Howell, to the Dispatch Box. We know that he will cover his duty with great honour and expedition.
	As I have already said, the difference in the situation with Burma is that the Burmese have withdrawn. If constructive engagement were possible with Burma, this would be pursued. Regrettably it has not been. That is a matter of great sadness to us all, because in other areas where we have been able to communicate that approach has yielded real benefit. Unfortunately, Burma is an exception; there are exceptions to every rule.

Maternity Units

Baroness Cumberlege: asked Her Majesty's Government:
	What is their policy towards the closure of maternity units.

Lord Hunt of Kings Heath: My Lords, the Government are aware of concerns over the closure of some maternity units. We commissioned a multi-disciplinary working party to consider this and make recommendations on safe and appropriate service provision.

Baroness Cumberlege: My Lords, I thank the Minister for his thoughtful reply. In so doing, I should declare an interest as patron of the National Childbirth Trust. I am very pleased that the noble Lord understands the anxiety in this respect, but is he aware that some reports of the situation have not been published? One in particular, produced by the Royal Colleges, construes that 80 units may close. These are consultant-led units. Can the Minister please give an assurance that a thorough appraisal of the situation will be made before any units are closed? Further, where there is the remotest possibility of this happening, can he assure us that consultant-led units will be transformed into midwife-led units?

Lord Hunt of Kings Heath: My Lords, we should be very cautious about accepting the figure of 80 at its face value. I can certainly assure the noble Baroness that the criteria being developed as a result of the work of the three Royal Colleges will be used by the NHS to help towards assessing the future provision of services. I can well understand the popularity of midwife-led units; indeed, as far as concerns low-risk births, there is no evidence to show that such units are unsafe.

Lord Clement-Jones: My Lords, it may be that as many as 80 smaller units are involved if press reports regarding the report of the Royal Colleges are to be believed. Is it not quite unacceptable that many of these units face closure due to lack of medical specialists when many young "obs" and "gynae" registrars in training cannot get consultant jobs because such posts have not been created? Is it not high time that the Department of Health got to grips with the problem?

Lord Hunt of Kings Heath: My Lords, as far as concerns obstetric and gynaecological consultants, I can tell the noble Lord that Ministers met with the president of the Royal College only last week. He put forward some very interesting suggestions as to how we should move forward in tackling the issue. We shall consider his suggestions most carefully in addition to the other matters that we have taken forward for consideration in relation to the problem of "obs" and "gynae" posts.
	Again, I urge caution on the noble Lord as regards the figure of 80 units. The report that we received from the Royal Colleges does not make any recommendation in relation to the closure of units. However, the colleges have provided very helpful criteria under which the NHS can make proper decisions about the future configuration of maternity services.

Baroness Goudie: My Lords, today is the start of Breast-Feeding Awareness Week. Will the Minister confirm that the Government will ensure that all maternity units encourage the benefits of breast-feeding for the baby and the mother?

Lord Hunt of Kings Heath: My Lords, I would be happy to do so. Breast-Feeding Awareness Week has been run for a number of years. I believe that it has proved to be successful. We certainly continue our support for it. I believe that the campaign launched this week will be highly effective in encouraging those who wish to do so to breast-feed and will perhaps also combat negative perceptions of breast-feeding which may be held particularly by the male partners of mothers.

Baroness Sharples: My Lords, how many mothers now wish to give birth at home and are they being encouraged so to do? I had my four at home and I certainly have not suffered as a result.

Lord Hunt of Kings Heath: My Lords, as my wife gave birth to two children at home I very much agree with what the noble Baroness says. The latest figures I have show that throughout the 1980s home deliveries accounted for 1 per cent of the total number of births. That proportion has slowly risen. In 1994-95, 1.8 per cent of total births were home births. I very much accept that the NHS should do its best to meet the legitimate wishes of women who wish to have a home birth.

Lord Redesdale: My Lords, I must declare an interest as my wife expects to be using the maternity service in the next week and a half. Is the Minister aware that maternity services in London are under severe strain through lack of staff? This is apparent to those who are about to use the service.

Lord Hunt of Kings Heath: My Lords, the Government are committed to developing policies and practices to encourage more nurses and midwives to enter the NHS. The campaigns that we have run have been successful. We have attracted more nurses and more midwives. We have increased the number of training places available. I believe that those measures, along with the other work in developing maternity services, will ensure that the noble Lord and others receive the best possible service.

Prison and Crime Reduction

Lord Dholakia: asked Her Majesty's Government:
	Whether the statement by the Lord Bassam of Brighton on 10th April (HL Deb, col. 9) that "prison works" is consistent with the finding of Home Office Research Study No 187 that the largest reductions in offending occur in community based programmes.

Lord Bassam of Brighton: My Lords, as I said to the noble Lord on 10th April we believe that prison can be a positive experience and our aim, and that of the Prison Service, is to make it work. Although Home Office Research Study No. 187 provides evidence that community-based programmes generally show better results in reducing offending, programmes which take account of "what works" principles can be successful in reducing offending in any treatment setting. There is considerable evidence that programmes in prison can be effective, as can the provision of constructive regimes. Indeed, international research shows that good programmes which are delivered well can reduce re-offending by up to 33 per cent.

Lord Dholakia: My Lords, the subtle use of the English language has never failed to amuse me. If prison works, why has there been such a huge rise in serious crime in this country?

Lord Bassam of Brighton: My Lords, I am sure that there are many reasons for increases in crime across the United Kingdom. However, this Government's commitment and determination to tackle all of those issues remain unaltered. We shall continue to press through and put in place effective crime reduction programmes. There is little doubt that crime reduction programmes will in the longer term have a most profound effect and impact on levels of crime.

Lord Ackner: My Lords, does the Minister agree with the oft repeated statement that prison is frequently an expensive means of making bad people worse? Does he accept that Parliament has accepted that proposition in legislation; namely, the Criminal Justice Act 1991, which makes prison the sentence of last resort?

Lord Bassam of Brighton: My Lords, prison may well be a sentence of last resort, but it is an effective and necessary sentence. I would like the noble and learned Lord and others to say what is the alternative for those who are convicted of offences, particularly serious offences. Prison constitutes an expensive provision, but it is necessary.

Lord Janner of Braunstone: My Lords, does my noble friend accept that, where possible, punishment in the community is preferable to punishment in prison for all kinds of reasons? Has he been able to assess, as yet, the effect of the probation programmes which are run according to the "what works" principles, and which he has said can be successful? But are they? What is the national programme to extend probation practice according to that principle?

Lord Bassam of Brighton: My Lords, we believe that "what works" is an effective programme. Research evidence shows that properly conducted offender treatment programmes can have a significant impact on reconviction rates, whether those programmes are conducted in prison or in the community. The research literature reveals a broad consensus of about a 10 per cent typical reduction in reconviction rates, compared with those offenders who do not attend the programmes. The "what works" initiative that we are introducing provides better planned, targeted and delivered programmes to bring down overall conviction rates. These programmes are based on methods known to stand the best chance of reducing reoffending. It is our intention to start introducing the first of these programmes later this month.

Lord Elton: My Lords, given that the average cost of a custodial sentence is £2,070 a month, according to government figures, will the Government spend a small percentage of the extra money that is necessary to ensure that the majority of prison sentences have the chance of proving to be the positive experience which the noble Lord tells us they are in terms of education, out of cell time and constructive work? Any money that is left over could be best spent in stopping people becoming criminals altogether.

Lord Bassam of Brighton: My Lords, I entirely agree with the final point that the noble Lord made. He speaks with great wisdom on the subject. This Government's programme is all about improving the purposive nature of people's time spent in custodial sentences. Between 1997 and 1999 we have managed to add an extra 20,000 teaching hours across the prison estate. That is part of our general programme. We must invest in education and training as we can demonstrate a clear and proven track record that that has the best effect in terms of what happens to prisoners when they leave prison and try to access the world of work. We must continue that work and put more money into crime reduction in the community. Those are the important points of our programme.

Lord Avebury: My Lords, does the Minister think that short custodial sentences are a positive experience for graffiti artists, or does he consider on the contrary that it would be better to give those people community service to enable them to remove the graffiti which has been daubed on walls by other people?

Lord Bassam of Brighton: My Lords, I am sure it would be much better to encourage graffiti artists to produce more mainstream art. I am not aware that a large number of graffiti artists are incarcerated within the prison estate. It is often felt that we lock up people unnecessarily. The favourite example which is given is that of fine defaulters. As of today of a prison population of some 64,000 just 56 are fine defaulters.

Lord Allen of Abbeydale: My Lords, notwithstanding what has been said about rehabilitation and education, does the Minister agree that there will always be prisoners who, on leaving prison, will return to society embittered against authority; or perhaps having learned new ways of committing crime from fellow prisoners; or who may have become drug addicts during their time inside, all of whom are likely to reoffend? Is not that how prison works in a rather unattractive way?

Lord Bassam of Brighton: My Lords, the noble Lord contributes to an important and interesting aspect of the debate. Of course there will be prisoners who feel embittered as a result of being in prison. Our task, and that of any government, must be to try to make that experience as positive as possible. We should never give up on this issue. As regards drugs and prison, we have now had some considerable success in reducing the quantity of drugs used in prison. Over the past two years we have reduced drugs found through mandatory drugs testing from 24 per cent to 14 per cent. I believe that that will have a desirable long-term impact on reconviction rates.

The Lord Bishop of Bristol: My Lords, in light of the Prison Service targets for purposeful activity, will the Minister join me in congratulating Bristol prison on achieving 23.05 hours per prisoner per week during April--despite the plethora of bank holidays? More importantly, will the Government support and encourage the development of community prison chaplaincy as a contribution to a diminution in reoffending, especially among short-term prisoners and those on remand?

Lord Bassam of Brighton: My Lords, the efforts of the staff at that prison are obviously to be congratulated. The more hours of purposeful activity that can be encouraged, the better for all prisoners. Of course we support the prison chaplaincy in all its work. It has a considerable and highly desirable impact on the lives of prisoners and is much appreciated by all.

Lord Mackay of Ardbrecknish: My Lords, is the Minister aware and not embarrassed by the fact that I agree with his reply to the noble Lord, Lord Dholakia and others, in respect of the alternative to prison for persons who commit serious crimes? I welcome the Minister's conversion to the views of my right honourable and learned friend Michael Howard that prison works. It does, because convicted persons cannot reoffend while they are in prison.

Lord Bassam of Brighton: My Lords, we have heard that response before. I congratulate the noble Lord on agreeing with me.

Baroness Linklater of Butterstone: My Lords, is the Minister aware that the fastest increase in the prison population is accounted for by children and young people of 17 years of age and below? That is also the group with the highest reoffending rate, of 80 per cent and more. Does the Minister believe that those figures can justify the claim that prison works for that group?

Lord Bassam of Brighton: My Lords, prison will always be a necessity. If people commit serious offences, they must expect that prison will be an option. However, we need to make the time they spend in prison useful and valuable, and trust that will make a meaningful contribution--so that when individuals leave prison or young offender institutions, they are better fitted to entering the world of work--which I believe makes a strong contribution to ensuring that offenders do not commit more convictable offences. National Insurance: Employers' Contributions

Baroness Castle of Blackburn: asked Her Majesty's Government:
	What reductions they have proposed in the employers' national insurance contribution, when these have taken or will take effect, and by how much they will reduce the National Insurance Fund.

Lord McIntosh of Haringey: My Lords, as announced by the Chancellor of the Exchequer, the rate of employers' secondary Class 1 national insurance contributions will be reduced from 12.2 per cent to 11.9 per cent in April 2001, and from 11.9 per cent to 11.8 per cent in April 2002. As a result of those changes, employers' contributions to the fund will reduce by around £1 billion and £350 million respectively.

Baroness Castle of Blackburn: Does not the Minister think that is a scandal? It is not the Government who are giving the employers a sweetener but pensioner contributors, because the National Insurance Fund will shrink by £1.35 billion. The Government say, "We can't afford an earnings link. Look what it would cost. Contributions would have to go up". Would they? If only the Government would stop using pensioners' insurance contributions, as has happened over the years, to sweeten the taxes that they are levying on employers.

Lord McIntosh of Haringey: My Lords, the short answer to my noble friend is that I do not think that it is a scandal. It would be a mistake to think that such a change in a very large fund is "defrauding"--my noble friend used that word last November--pensioners. Pension entitlement has not been taken away by the changes to national insurance contributions. Neither a surplus nor a deficit in the National Insurance Fund determines how much is available for pensioners; otherwise, if there were a shortfall in the fund, as in 1993-94, it might be suggested that pensions ought to be cut. I do not think that my noble friend would agree with that being done.

Lord Tomlinson: My Lords, will my noble friend explain why some 81 million national insurance numbers are currently in use? Can he give some indication of how many of those numbers involve neither an employer's nor an employee's contribution? Does he agree that any reform of the national insurance system should involve the allocation of national insurance numbers--whose proliferation only seems to be of benefit to potential fraudsters?

Lord McIntosh of Haringey: My Lords, as Professor Joad used to say, it all depends what one means by "in use". Many more national insurance numbers have been issued than there are persons who have them for legitimate purposes. That does not necessarily mean that the other numbers are being used fraudulently. However, the availability and potential misuse of national insurance numbers is a problem that the Treasury is addressing.

Lord Goodhart: My Lords, does the Minister agree that employers' national insurance contributions are a straightforward employment tax? Would it not be better to move away from taxes on employment--which we wish to encourage--to taxes on the use of non-renewable resources and on environmental pollution?

Lord McIntosh of Haringey: My Lords, I am glad the noble Lord asked that question. As I was responding literally to the previous question, I was not able to say that the first reduction in employers' national insurance contributions in April 2001 is to ensure that the climate change levy is neutral in its effect on industry as a whole; and that the second, smaller reduction in April 2002 will ensure that the aggregates levy is neutral in its effect on industry as a whole. Both are desirable environmental objectives. Although I do not agree with the noble Lord's wider generalisation, I hope that he agrees that those two reductions argue in support of his concern for the environment.

Baroness Castle of Blackburn: Does not the Minister's reply and the comments made by others opposite mean that the Government are not treating state insurance as an insurance system at all? It is thought not to matter and is to be left to wither on the vine. As Mr Michael Portillo said when he was Financial Secretary to the Treasury a short while ago, it becomes nugatory. The Labour manifesto stated that a Labour Government would make the basic state pension the foundation of their pensions provision. Now they are admitting that it does not matter: "It is expendable. A fund doesn't mean a fund. We can allow it to continue to diminish". This is not the first cut. The Tories cut it. They would. They do not believe in state insurance. I thought that this Government did. May we take it from the Minister's reply that he is giving us a guarantee today that there will be no further cuts in employers' contributions?

Lord McIntosh of Haringey: My Lords, I am not responsible for what the Conservative Party says in government or in opposition; I certainly do not subscribe to the views that my noble friend attributes to them. The present Government have not in any way cut the state basic pension. It has been continued on the same basis since 1980. The effect of all government policies over the whole of this Parliament will mean that an extra £6.5 billion is available to pensioners, compared with the smaller figure of £4.5 billion that would be available if my noble friend's proposal to restore earnings-related pensions had been followed. Business

Lord Carter: My Lords, at a convenient moment after 3.30 p.m., my noble friend Lady Symons of Vernham Dean will, with the leave of the House, repeat a Statement that is being made in another place on Sierra Leone. The Statement is likely to be taken following discussion of Amendment No. 105 to the Child Support, Pensions and Social Security Bill.

Street Works Bill [H.L.]

Lord Peyton of Yeovil: My Lords, I beg to introduce a Bill to make provision for charges for the occupation of a maintainable highway by undertakers executing street works. I beg to move that this Bill be now read a first time.
	Moved, That the Bill be now read a first time.--(Lord Peyton of Yeovil.)
	On Question, Bill read a first time, and to be printed.

Child Support, Pensions and Social Security Bill

Baroness Hollis of Heigham: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
	Moved, That the House do now again resolve itself into Committee.--(Baroness Hollis of Heigham.)

On Question, Motion agreed to.
	House in Committee accordingly.
	[The CHAIRMAN OF COMMITTEES in the Chair.]
	Clause 19 [Reduced benefit decisions]:

Lord Higgins: moved Amendment No. 94:
	Page 20, leave out lines 12 to 15.

Lord Higgins: In moving Amendment No. 94 I shall speak also to the amendments grouped with it standing in my name and that of the noble Earl, Lord Russell.
	Amendment No. 94 is concerned with "reduced benefit decisions" in relation to the payment of child support. Effectively, we on this side of the House are strongly in favour of more effective measures to ensure that those responsible for having children seek to meet the payments to finance them. Generally speaking, there are a whole series of penalties, but this particular penalty is unusual in stating that should a mother decline to provide information to the Child Support Agency on the grounds that if she were to do so she would be in danger of violence from the absent parent arrangements will be made to impose a penalty upon her. We are concerned whether that is appropriate.
	The jargon used is whether she has good cause for not seeking child support--which would result in the cost of the children falling on the Exchequer or the National Insurance Fund--and, effectively, it suggests that she should not do that. As a result, the department or the Child Support Agency will seek to establish whether or not there is good cause in a particular case.
	We propose the amendments because of representations we have received, for example, from the National Association of Citizens Advice Bureaux, which has many people dealing with these kinds of cases. It suggests that decisions to reduce the benefit of the parent with care because she has not co-operated with the department and has instead made excuses--for instance, that she would suffer violence--are not infrequently incorrect, unreasonable and inappropriate.
	Coming from the National Association of Citizens Advice Bureaux, this is strong language. The association therefore goes along with the recommendations made by the Social Security Select Committee in another place that the application of the reduced benefit penalty should be suspended over a phasing-in period and that the operation of the present scheme should be reviewed. Perhaps the second recommendation is fairly formidable; I understand that some 28,000 decisions have been made in regard to reduced benefit.
	The other matter which gives cause for concern is the way in which the severity of this particular penalty has escalated over time. If we go back to 1993, the penalty was open to revision in the light of changed circumstances and the number of cases was at a comparatively low level. Since 1996, the severity of the penalty has increased considerably and there seems to be some argument for reviewing the arrangement. That is the essence of the case. We look forward to hearing the Minister's response. I beg to move.

Baroness Hollis of Heigham: Before the noble Lord sits down, perhaps I may ask him which government were responsible for the changes in 1996.

Lord Higgins: Certainly the previous government were responsible. That is why we can reasonably argue that, given the space of time since then, one should take into account the overall situation; the representations one has received; and, in particular, one's experience of the way in which the system is working. The more recent evidence seems to indicate that it is not working as satisfactorily as one would wish. These are essentially probing amendments. We wish to get the Government's reaction to the considerable number of recent cases put forward by the National Association of Citizens Advice Bureaux.

Lord Boston of Faversham: As Amendments Nos. 96 to 98, 101 and 102 are also being spoken to, I must point out to the Committee that if Amendment No. 96 is agreed to, I cannot call Amendments Nos. 97 and 98; and if Amendment No. 101 is agreed to, I cannot call Amendment No. 102.

Baroness Massey of Darwen: Amendments to or the removal of Clause 19 would be a retrograde step. A reduction or time-limiting delay of the benefit penalty would be counter-productive.
	The whole emphasis of the Bill--this was stressed during last week's proceedings and has been supported by a number of agencies which seek to help children--is to tackle child poverty. What is good for the child is of prime importance.
	Clause 19 concerns benefit penalties for parents with care who are on income support or on income-based jobseeker's allowance and who, without good cause, ask the Secretary of State not to act to recover child support; or fail to provide relevant information; or refuse to take a scientific test.
	Child support cannot be a voluntary option of whether or not to involve the CSA or whether to rely on benefit provided by taxpayers, many of whom are themselves parents supporting children. Many thousands of children would not receive the maintenance due to them. The only parents affected by sanctions are either those who face no risk and prefer to rely on benefits, or those who refuse to tell the DSS why they are opting out.
	The penalty provision needs to be retained. It would not be fair on children if parents were allowed to prevent the recovery of child support; it would not be fair on the parents who do support their children; and it would not be fair on the taxpayer.
	Of course, sanctions should be avoided wherever possible. Parents with care must be clearly told about their rights; they must not receive a benefits sanction by accident. However, low sanctions for a short time, such as those suggested, may not be enough to encourage parents with care to co-operate with the CSA. Delaying the introduction of penalties would mean that many parents with care would not seek child maintenance. Clause 19 as it stands seems to offer protection to parents and children. It should not be tampered with.

Earl Russell: The noble Baroness, Lady Massey of Darwen, is on her first child support Bill. Welcome to the club. I am now on my third. In 1991, I succeeded in deleting the whole provision of the benefit penalty. The "good cause" provision was the sop put in by another place to keep me quiet. It may have reduced the volume of my voice somewhat; it has not kept me quiet.
	I cannot help thinking, on the record of the CSA since 1991, that Clause 19 and the measures preceding it have done a great deal more to increase child poverty than to diminish it. So I ask the Minister: in the light of the Government's pledge to abolish child poverty within 20 years, how will they abolish child poverty while depriving the mother of 40 per cent of her income? There seems to me a certain Gilbertian element of paradox about that suggestion.
	The noble Baroness, Lady Massey of Darwen, said that all that is needed is for the mothers to comply. That reminds me a little of the argument of the ill-fated General Stockwell, who commanded the British intervention in Port Said during the Suez campaign. When challenged on the level of casualties in Port Said, General Stockwell said it was all the fault of the Egyptians who would insist on defending themselves.
	The Government here are intruding into some of the most sensitive areas of private life and into some of the strongest personal emotions which become stirred in the whole complicated history of the relations of the sexes. It is an area in which the Government, by rule of thumb, assume they must be right and that everybody has to comply. If only the world were that simple. The Government here are out of their element--and, when I say the Government, I make no political point. We have here, even more than in most other areas of policy, a situation where the Court and Treasury Party is always in office, no matter which political colours it may wear and the Country Party is always in opposition, no matter which political colours it may wear. It is my contention that the Court and Treasury Party here has it fundamentally wrong. It has overrated the limits of its competence and is attempting to tackle matters which it really cannot handle.
	We have here a large group of amendments. The first ones to which the noble Lord, Lord Higgins, has spoken put forward a proposal which emanates from the Social Security Select Committee in another place--a two year deferral of the operation of the benefit penalty in order to see whether, in the light of the Minister's achievement, on which I again warmly congratulate her in introducing the maintenance disregard, a carrot might prove rather more effective than a stick. I support that approach with the sole rider that, if we had a rather bigger carrot--and I have an amendment down to that purpose--it might work a little better. If the noble Lord, Lord Higgins, should choose to go beyond probing and press those amendments, we would support them.
	With regard to the other group--the noble Lord, Lord Higgins, and we have down identical amendments. That is a waste of paper that I think we should not repeat. The amendments seek to go back to the level of deductions which were originally introduced in 1991 and to go back once more to the duration of deductions. The new one is for three years and may be renewed ad infinitum. In the briefings from the CAB, we have one which had been running since 1994--five years--before the parent with care discovered what it was all about. She supposed that it was for poll tax arrears. That is the danger of an indefinite provision.
	Here, too, we are of one mind and, whichever of our amendments goes forward, we would support it. My ambitions go further. I want, as I have wanted since 1991, to abolish the benefit penalty altogether. I have three reasons for wishing to do that. First, it is draconian; secondly, it is outside the area of the Government's competence and, thirdly, it is ineffective or--and in my view this is equally bad--effective in the wrong cases.
	Whenever one discusses any of these policies designed to deter people, like the use of prescription charges to deter people from claiming unnecessary prescriptions, it is always the wrong people who are deterred. The genuinely ill are deterred and the hypochondriacs are not deterred by anything. So, if the penalty is producing compliance--I hope the Minister may enlighten us a little more on the extent to which it is--then we have no reason to suppose that it is producing compliance in those cases where it ought to be producing compliance. We know it is producing compliance in a number of cases where, for the mother's own safety, there ought not to be compliance.
	A 40 per cent reduction in income support is a fairly draconian penalty. I shall not take us again through all the argument about the Acheson report, the Medical Research Council and the rest. The Minister knows that I have considerable doubts about the claims of income support to be even so much as a subsistence benefit. If you have only 60 per cent of income support, that is a benefit on which I think legal subsistence is extremely difficult.
	We have one case here which was referred to in an article in the Independent a few weeks ago where a mother was found to be stealing nappies from the supermarket because she could not afford to buy them. I do not see what that does to reduce child poverty. We have another case which comes from the CAB of a mother who was subjected to a reduced benefit directive and was unable to buy her youngest son's school uniform with the result that he was excluded from the school.
	The Minister should not so blithely assume that her policy is for the benefit of children. I know it is so intended, but the Minister knows what paves the road to hell. I think her confidence in this is entirely misplaced. My greatest concern is that, in dealing with these raw emotions, the Government are in an area where they are not a competent judge and where material penalties are not necessarily a suitable deterrent.
	The emotions raised by a relationship break-up can be extremely strong. All that the Government can put in the scale against it is material penalty. In some of the cases with which we are dealing, that is a very light feather to put in the scales against the intensity of emotion which is aroused. I have never thought of the Minister as a "Material Girl" but, in this context, I think that is all that she can claim to be. There is no room in the CSA's calculations for feelings. In fact, there is practically no right to have any feelings other than those prescribed by statute.
	Of course, the feelings that result from relationship break-down are not always rational. I would not for a moment attempt to pretend that they were. First, the Government are not competent to judge which feelings are rational and which are not--they do not have the evidence--and, secondly, even supposing that the feelings are not rational, those are perhaps hardest of all to deter by a mere material penalty.
	In 1996, during Mr Andrew Mitchell's tenure of office, the Government undertook a survey--not a particularly good piece of research--in which, out of a sample of 38, 26 people reported that the reduced benefit directive had no impact. Mr Andrew Mitchell chose to take that finding literally and therefore argued that the penalty was not sufficient to deter. I think Mr Mitchell had failed to read between the lines and had failed to recognise language which might have been more accurately transliterated--and I cannot repeat all the words in the Chamber--as ". . . off". People simply did not recognise the right of the state to use this penalty to make them resume a contact which they were absolutely determined to eschew. In fact, the penalty was wide of their area of concern.
	Domestic violence is only the tip of that iceberg. I think all governments have been sincere in their attempts to follow the good cause provisions and I welcome that. Of course, the administration is quite another matter. I have already said in the course of this Bill that I think the culture of this country is very far from sufficiently aware of the dangers which domestic violence may pose under the need to preserve confidentiality.
	We had one case which was reported recently by the CAB when a client had been threatened by the absent parent and the absent parent even threatened the CSA. Even after that, the CSA refused to recognise that she had good cause. So she suffered the benefit penalty. That is surely a wrong decision on the law as it presently stands. I am delighted to give way to the Minister.

Baroness Hollis of Heigham: Does the noble Earl then go on to argue, which is the crucial information, that, as a result, the woman then suffered violence?

Earl Russell: No, I do not.

Baroness Hollis of Heigham: Can the noble Earl give me any instance in which, to his certain knowledge, she has?

Earl Russell: When we discussed this matter last week I had seen many such examples. I have not succeeded in tracking them down and therefore must fail to rise to the Minister's challenge for the time being. It is one-nil to the Minister on that as it stands at present. I congratulate her on her determination in following up the points I raised last week. Some of that has come to my attention--not through her. I congratulate her very warmly on it and thank her for it. However, the noble Baroness will not challenge my contention that in this case, if the facts are as alleged, the penalty was wrongly imposed. That does happen. It is a distressingly frequent situation.
	I have other cases. The case of Georgina McCarthy, about which my honourable friend Mr George is much concerned, is not an exact direct case in point. Again, it illustrates the weakness of the culture for not being sufficiency aware of the need for confidentiality. But we are in a different area, and a much more difficult one, when we deal with the woman who has fear of violence without direct experience of it. I have in my hand the report prepared by the department in April 1996 which studied a series of model cases. The passage to which I am referring may be found on page 114. It is the case of Miss Rogers. She described a man who had threatened her, often throwing things or thumping the wall in anger. The case study states:
	"She got frightened that he would hurt her one day. She had decided it was time to make a complete break; to end the relationship ... and make a new start. She had come to a big city in another area of the country so that 'he will never find me'".
	That case was decided, having been studied in a seminar as a model case, not to be an example of good cause. I believe that that was mistaken on the law as it stands at present. She may not have offered clear evidence of harm. She had certainly offered clear evidence of undue distress and she had convinced me at least that, whether or not she was found to have good cause, she was not going to co-operate. The penalty would fall wide of its mark.
	The Secretary of State here is judge and party in his own cause. That is a big weakness in the legislation. I do not think it is any good setting out to starve mothers into submission as if they were besieged towns. The Minister says that the legislation will never work on a voluntary basis. I say, what I said first on "Bill do now pass" in 1991. Nothing has yet convinced me that I am wrong. The legislation will not work unless it is on a voluntary basis. You can coerce all the people some of the time or you can coerce some of the people all the time; but you cannot coerce all the people all the time.
	If this legislation is to work, someone has to be in favour of it. So if it cannot be made to work by applying it only to those mothers who see an advantage to themselves in it, the Government are simply attempting a job of coercion which is beyond their reach. Their eyes are bigger than their stomachs. They will not be the first government to make that mistake and I fear they will not be the last.

Baroness Carnegy of Lour: When my noble friend moved the first amendment in this group the noble Baroness seemed to think that he could not do such a thing because the previous government introduced the concept of benefit reduction. I think that, all these years later, my noble friend has every right to read what the citizens advice bureaux are telling us and what the Select Committee has told us and to respond. The noble Earl, Lord Russell, has been completely consistent. He argued against this concept last time round when we legislated for this matter. He has reminded us of that. My noble friend has been extremely sensible and is doing something with which, I am sorry to say, the noble Baroness does not feel she can go along.
	It surely is absolutely reasonable to pause for a moment to study the effect of the implementation of maintenance disregard before taking this draconian action which may make it impossible for a person to feed her family. A drop of income of 40 per cent, as was pointed out when the matter was discussed last week, can have a very serious effect on the nutrition of a family. We need not go into that again.
	During the remaining proceedings on the Bill I hope that the Minister will not go on accusing my noble friend of criticising something which began during the time of the Conservative government. The circumstances have now been changed by the present Government. It may be a good idea just to pause, as has been asked of us by the Select Committee in another place and by the CABs, to see what the effects will be before the draconian measures are implemented.

Baroness Hollis of Heigham: I should like to open my response to this group of amendments by responding to the direct challenge raised by the noble Earl, Lord Russell, as to how I think the proposals in any sense honour the commitment made by the Prime Minister and the Chancellor to reduce and then abolish child poverty. Very straightforwardly, the children in this country who are poor are disproportionately the children of lone parents and particularly the children of lone parents where, first, the mother does not go out to work and where, secondly, the father of that child does not pay maintenance. If it is asked what the Government are therefore doing about it, they are seeking to help the mother back into work through the New Deal, the working families' tax credit and the minimum wage. If she feels that it is not right for her to go back to work at this point, she will effectively have had, between April 1997 and October this year, nearly a 100 per cent increase in the income support rates for children under 11, which is a huge increase--from just over £16.80 to around £31 during the course of the first three years of this Government.
	We are seeking, first, to encourage her back into work when she feels ready; secondly, to make her benefit levels more generous for children while she is out of the labour market; and, thirdly, to get the maintenance flowing. Together, those are the ways we will springboard those children out of poverty and honour the Prime Minister's commitment. I do not know whether the noble Earl wishes to intervene. No, he accepts what our policy seeks to do. In that sense, what we are seeking to do in terms of getting maintenance flowing is an integral part--not an accidental bolt-on--of seeking to redress the problem of child poverty.
	As my noble friend Lady Massey said, Clause 19 is about the benefit penalty for parents with care on income support or income-based JSA who, without good cause, ask the Secretary of State not to act to recover child support or who fail to provide relevant information or refuse to take a scientific test such as DNA. The amendments seek both to reduce and time limit the benefit penalty and to delay its introduction. Amendments Nos. 94. 95, 96, 99 and 101 would make the clause unworkable. Amendments Nos. 102A and 198A seek to remove the clause from the Bill and to repeal Section 46 of the 1991 Act that relates to reduced benefit directions which Clause 19 is replacing.
	As my noble friend said, the impact of removing Clause 19--Section 46 of the 1991 Act--would go much further than just removing the penalty. Effectively--the noble Earl, Lord Russell, acknowledged this point--it would make child support a voluntary option by giving the lone parent the choice of whether or not to involve the Child Support Agency or whether simply to rely on benefits provided by the taxpayers many of whom are themselves parents supporting children. I do not believe that low-earning, tax-paying fathers should be required to support the children of other fathers who can, but prefer not to, support their own children. I give way to the noble Earl.

Earl Russell: The logic of that argument would be complete if the Minister could tell us what taxpayers are spending in supporting harm caused by the hardship inflicted on lone parents who suffer the benefit penalty. When the Minister's department monitors that, she can complete the calculation. At present, she does not possess the information, and has admitted as much.

Baroness Hollis of Heigham: I think that I can help the noble Earl a little. At present, 85 per cent of lone parents are co-operating with the agency in naming the father. When I took over some responsibility for this portfolio, the figure was only about 30 per cent. The difference between that 30 per cent and 85 per cent, given the premium that is being introduced, is that that number of families and their children are denied the possibility of a £10 maintenance premium. Perhaps the noble Earl will accept and respect the fact that, under the new scheme, by placing the emphasis on getting the woman to name the father and therefore comply with the procedures of the CSA, children will be the direct beneficiaries. The figure has risen from 30 per cent to 85 per cent; I hope that it will be even higher in future.

Earl Russell: I accept the information and I thank the Minister. Before I accept the claim that they are the direct beneficiaries, will the Minister think again about the Gary Craig study of 53 families, which indicated the very high levels of stress caused to families by the operations of the CSA. How does the Minister weigh that against any increase in money? She has given no answer at all to my major question: what is the effect on mothers who suffer the benefit penalty? What hardship do they suffer, and what does that cost the taxpayer? The noble Baroness cannot complete the equation until she can answer that.

Baroness Hollis of Heigham: I am only a page and a half into my brief; I was hoping to return to those points. If the noble Earl thinks that I have not answered him fully, I am sure that he will wish to intervene and I shall respect his wish to do so.
	I repeat: if we were to follow the noble Earl's proposal and a lone parent decided not to co-operate with the agency, that would mean that many thousands of children would not receive the maintenance due to them which could make a real difference to their lives. Equally importantly, it is more likely rather than less that they will continue to have contact with their natural fathers, which we know is in the best interest of those children.
	Children are entitled to the financial as well as the emotional support of both parents. The CSA exists to ensure that non-resident parents meet their responsibility to their children. We believe that children have a right to support and that parents have a duty to provide it. That means, therefore, that child support is not an optional extra. It is right that the benefits system should step in, but only where parents are unable to support their children rather than merely prefer not to do so.
	In the new scheme, where child support or income-based JSA pays for children, child support action will follow unless the parent with care refuses to allow that to happen. Those who refuse without good cause face a benefit penalty equivalent to 40 per cent, not of their income support--I should like this point to be corrected--but of the adult amount that is applicable, which is a reduction of about £21 a week; it is not a sanction on the children's element within income support.
	The underlying purpose of a reduced benefit direction is to encourage parents with care to apply for child support unless they have good reason not to do so. We believe that a benefit penalty of 40 per cent of the adult applicable amount in income support is probably set at about the right level.
	We are conscious of the need to protect vulnerable parents and children. If there are reasonable grounds for believing that the parent with care or any child living with her would suffer harm, no penalty would result. The noble Earl asked why we are not taking feelings into account. We are taking them into account. If we believe that there is undue distress as a result of pursuing child support, no penalty will be imposed. "Distress" does not mean violence, but feelings. Only those parents who choose not to pursue child maintenance and do not have a good reason, or do not tell the DSS why, will have their benefit reduced. But those who will be put at risk or who will suffer undue distress as a result of child support action have nothing to worry about.
	I repeat: the only parents who will face a sanction will be those who either face no risk and simply prefer to rely on benefit from other fathers--I have never understood the morality of not receiving support from the particular father but being perfectly happy to have support from other fathers; that point seems morally "iffy"--or those who refuse to tell the DSS why they are opting out.

Lord Higgins: Perhaps the Minister will give way. I am seeking to follow her argument carefully. The position is, indeed, as she has stated it. As I understand it, the dispute is not over the basic argument but over decisions as to whether the adverse circumstances which would result in the benefit reduction exist. The point is whether the decisions are being correctly made, which is why they are described by the CAB as incorrect, unreasonable and inappropriate in a number of cases.

Baroness Hollis of Heigham: That is a wider issue. The noble Earl, Lord Russell, would like to see the reduced benefit direction removed altogether. I am seeking to reply to the entire group of amendments. It seemed to me sensible, therefore, to address the bigger issue before coming to some of the more specific points raised. The bigger issue is: what is the justification for having a reduced benefit direction at all?

Earl Russell: Perhaps it may clarify matters if I say that my argument is that, by the nature of the case, a large proportion of the decisions will always be erroneous.

Baroness Hollis of Heigham: That is a second order statement. The noble Earl's basic statement is that whether or not the father is named should be optional. He will say that if we compel the mother to do so and she refuses, there will always be a percentage of error. I pressed him to give an instance where pressure by the CSA to require the woman to name the father, when she was reluctant to do so because of fear of violence, had actually resulted in violence. The noble Earl was candid enough to say that he had no such evidence.
	I should not wish to say that the CSA gets it right all the time. There may be occasions on which it has applied a reduced benefit direction about which the noble Earl would have some concerns--although, of course, there is an appeals system. Where the alternative is the case--where a parent has been required to name the father even though reluctant to do so because she alleged a fear of violence which the DSS did not accept--I could be wrong, but I have not been made aware of any case, nor I believe has the noble Earl, where as a result the lone parent was subject to the violence that she predicted. That is crucial to the effectiveness of the CSA. There may be cases where the woman has refused to name the father and there may have been a benefit penalty which she or the CAB regards as inappropriately applied, but I do not know of a case where violence has resulted, and that is the test.
	As a result, 85 per cent of parents with care and claiming income support now choose to seek maintenance for their children. However, the fact remains that a number of parents with care refuse to co-operate with the CSA without good reason. As I said, they may prefer the taxpayer rather than their former partner to support their children. But I do not believe--here I disagree profoundly with the noble Earl, Lord Russell--that it is a choice that they are entitled to make; namely, that some other father rather than this particular father should support their children.
	Equally, there may be other reasons. The woman may have a new partner and fear that if the CSA is involved that may come to light and affect their benefit entitlement; or perhaps in the past she may have done an informal deal with her ex-partner; he may have arranged with the woman that if she refuses to name him and therefore he does not have to pay any maintenance, he, in turn, will recycle back to her some of the maintenance that he has saved. We believe that we need the benefit of penalty provision. It is not fair on children or on taxpayers if we allow parents to prevent the recovery of child support on their behalf. We want to ensure their co-operation, above all for the sake of the children.
	The noble Earl was gracious enough to admit that we are trying to strengthen the grounds for reasons for compliance. Under the new scheme, the man's average maintenance payment falls. It is likely to be reduced from about £38 on average to about £31 on average. Therefore, under the new scheme, if the woman failed to name him, she would not only suffer a reduced benefit direction of £21 but would also lose her £10 premium--a loss in total of £31. That means that if it were worth her while doing an informal deal with him, he would have to pay her at least £31 so that she was no worse off, or, in other words, the level of maintenance that he would probably have to pay anyway.
	With the best will in the world, we hope that we have constructed a system where financially it is not worth the while of either party to manipulate the system and women will find it attractive to co-operate with the CSA in the best interests of the child. Where we can we wish to avoid imposing a benefit penalty. The number of RBDs in place has fallen, and we hope that that decline will continue. In 1996 the figure was 17,500. The latest figure as of November 1999 was 13,700. That is a significant reduction, and represents only 1.5 per cent of the total number of parents with care on income support.
	The noble Lord pressed me to say whether we knew what happened to women who accepted reduced benefit directions. I asked for research to be done not only for my information but because I suspected, quite rightly, that the noble Lord would want to know. The department's research suggests that 70 per cent of those with reduced benefit directions come off the benefits sanction within a month or so. Of those, one-third go into work and are no longer dependent on benefit and therefore it is not a matter for the CSA. One-third re-partner--which many of them may already be doing--and, as a result, decide to take themselves off the books rather than have the matter explored further and possibly lay themselves open to further action. One-third decide to co-operate. Of the remaining 30 per cent, almost all come off sanction within the year.
	The noble Earl, Lord Russell, said that the Government were not a competent judge as to whether or not a woman wanted to name the man. I do not see it as a battle between the lone parent and the CSA. Sometimes the lone parent makes the judgment, in my view inadvisedly, not to co-operate and that is not in the best interests of the child. Somebody must decide the matter when there are conflicting interests.

Earl Russell: What makes the Minister believe that she is a better judge than the parent of the interests of the child?

Baroness Hollis of Heigham: All the research available to us suggests that, for example, where lone parents thwart contact--that happens in 42 per cent of cases--that is not in the best interests of the child. Surely, the noble Earl accepts that there will be occasions when, for example, the lone parent has a new partner who wants her to cut all her ties with the former partner, even though the child needs those ties. In those cases her interests as she perceives them and the best interests of the child will be at odds. We believe that where that happens it is the responsibility of government to side with the child, which is what we are doing here. We hope that that does not happen very often, but the noble Earl will accept that that can and does occur. In my experience such cases arise.
	I am confident that we are doing all that we can to ensure that there are sufficient safeguards in place so that parents at risk do not suffer accidentally. No one should suffer such a penalty through ignorance. If the woman's circumstances change and she forms a new relationship she may not fully understand the financial implications, for example that she must still seek child maintenance if her new partner is on benefit. For that reason, not only do we seek to set up the system so that financially it is attractive to her, and in her interest, to co-operate; we attempt to back it by improving the quality of advice through the development of the face-to-face service and the opportunities and contacts that she has.
	Those who claim good cause are, we believe, treated in an understanding way by staff who are specially trained in the procedures. The training and procedural instructions were designed following considerable consultation with clients and key groups representing lone parents. Therefore, the staff who work with lone parents and seek to determine whether or not good cause is appropriate have been trained in part by the organisations that represent lone parents. We have done everything we possibly can to ensure that that training is professional and that there is an incentive.
	It may shock the Committee to learn--this may put noble Lords into the mindset of the issues with which we must deal--that the Government seriously considered the removal of the provision of good cause altogether and making it mandatory for everyone to name, as happens in many European countries and in broad terms in the United States and New Zealand. Those countries have decided that by making it mandatory they can better protect the lone parent and they are more likely to discourage bad behaviour by non-resident parents because they know that they will not avoid maintenance by threatening violence. The NACSA website remains on my mind. I have seen for myself the advice given to men by a men's group:
	"Break a window, send a photo, and you'll avoid maintenance".
	That advice was given on a website to all men who wished to avoid maintenance. That threat can work precisely because the lone parent normally has a choice and, therefore, can be blackmailed or pressured by her partner not to name him. The man knows that whatever despicable behaviour he engages in will make no difference, as is the case in New Zealand, many other European countries and in part in the United States. In Europe some of that bad behaviour can be checked and is referred to the police.
	We seriously considered whether that offered better protection to the lone parent than the policies that we had pursued. However, as a result of the consultation exercise on the Green Paper, I was persuaded that that would send out a wrong signal about domestic violence and that, although it might stop some men, where the man was under the influence of drugs or alcohol the risk might continue and we did not want that.
	It is important to bear in mind that parents who do not receive child maintenance will lose any chance of receiving the child maintenance premium. In all, 600,000 children in the poorest families stand to gain over £150 million a year through the maintenance premium, and individual families will be up to £10 a week better off. We hope that that will be real money which goes to children.
	Amendment No. 102 would also result in children losing out in child maintenance. This amendment would decrease and time-limit the reduced benefit decisions. Here, what is proposed is a 10 per cent, instead of a 40 per cent, sanction for six months. Before October 1996 when the current sanction of 40 per cent was introduced, there was a sanction of 20 per cent for six months and then 10 per cent for a year. However, at that time around 70 per cent of parents with care initially claimed that they had good cause not to co-operate with the CSA, and of those only about 8 per cent were found to have good cause. No one of whom I am aware whose good cause has been rejected has subsequently gone on to experience violence. I have no evidence to suggest that the CSA has ever made a wrong decision on that.
	These figures were a cause for concern and the subject of a report by the Social Security Select Committee in June 1996 which recommended a strengthening of the sanctions. We want a meaningful penalty. Amendment No. 102 would reduce the sanction and time-limit it to six months. The effect would be to reduce the benefit of a parent with care by about £5, instead of £20, per week. I do not believe that that would be effective in encouraging the lone parent to co-operate or that it would be high enough to discourage the manipulation of the benefit system that I have just described.
	Amendments Nos. 97 and 98 would delay the introduction of a reduced benefit penalty for two years from the introduction of the child maintenance premium. The underlying purpose of a reduced benefit direction is to encourage parents with care to apply for child support, unless they have good cause for failing to do so. To delay the introduction of this penalty would reduce the incentive and mean that many parents with care would not seek child maintenance. It would also mean that many fathers would be exempt for a period of up to two years from paying maintenance if the woman chose not to name him and, as a result, would not get into the habit of paying. The hope and expectation that after two years' grace he would go on to pay maintenance with willingness seems to be Utopian. I do not know why the figure was chosen. The Social Security Select Committee believed that during the five-year phasing-in period the new incentives should be given a chance to work before the provisions of Clause 19 were brought into effect. We do not believe that that is reasonable.
	Amendments Nos. 94, 95, 96, 99 and 101 remove a number of subsections from Clause 19. Their effect is to retain Clause 19 but to make it unworkable. I should like to quote to the noble Lord, Lord Higgins, the words of Mr Pickles in another place at Committee stage on 3rd February. When dealing with a similar amendment moved by the Liberal Democrat Party, he said:
	"I support the Minister",
	although one would not believe that tonight. He went on:
	"Legislation is about the support of children, and one cannot opt out of that unless there is an adequate reason"--
	for example, good cause--
	"why the taxpayer should bear that burden. People have occasionally been content to accept both benefit and a little extra money. It is important to ensure that the CSA is respected. I have never come across a case in which the CSA has gone too far".
	Amendments Nos. 102A and 198A seek to remove Clause 19 from the Bill. They also repeal the existing legislation on reduced benefit directions and take them out of the child support system.
	I think that it would be deeply unfair, to taxpayers, other fathers and, above all, to children, to make child support voluntary, which is what the removal of RBDs would do, and to transfer the responsibility to other fathers--not that particular father, but generalised other fathers--to take on the care of those children. Why should some non-resident parents walk away from their responsibilities without good cause and, frankly, place those same responsibilities on other people who, because they are taxpayers, cannot protest about it? I do not believe that child support should be voluntary. The cluster of these amendments, subject to the provisions I have made with the noble Lord opposite, would make it voluntary. We know that the failure to pay child maintenance is bad for the financial and the emotional health of the child. Therefore, if Members of the Committee are on the side of the child, they will join me today in urging the noble Lord to withdraw the amendment.

Earl Russell: If the noble Lord, Lord Higgins, will forgive me, perhaps I may say that I understand the Minister's concern about non-resident parents walking away from their responsibilities. I suggest that in many cases the Minister is pursuing that concern at the expense of the child. The Minister thinks in categories. She thinks in averages. I ask the noble Baroness to read Hansard tomorrow and to ask herself how many times she has used the phrase "the child". One child is not like another. The average child is quite a rare animal. The Minister has great confidence that she is able to judge the interests of this mythical child better than the parent.

Baroness Hollis of Heigham: Can the noble Earl cite me any child who would not be better off if the family were not receiving maintenance? I think that it is perfectly proper to generalise in that respect.

Earl Russell: Perhaps the Minister could consider the possibility that although material matters are important, a child's interests may not be a matter of material factors alone. The happiness of the environment, the sense of safety and peace, and the avoidance of being in the middle of a game of battledore and shuttlecock may matter to a child. Money matters, but it is not the only factor. Until we take that on board, we cannot have a serious debate.
	I ask the Minister one final question. She will not think it material, but I shall ask her before answering it to pause for one deep breath long enough to wonder why I think that it is material. Let us suppose that the Minister is on benefit and is threatened with a benefit penalty of this size if she does not join the Conservative Party. Would she do so?

Baroness Hollis of Heigham: I would have considerable difficulty in doing so. If I may say so, that is not a helpful analogy. Normally, I am full of admiration for the stories the noble Earl brings. But to suggest that if I fail to pay I could expect to suffer violence from the Conservative Party seems unlikely; undue distress, maybe, but violence--surely not.

Earl Russell: Does the Minister understand that a single parent may believe that it is contrary to her conscience to do what the Government require of her?

Baroness Hollis of Heigham: No. The noble Earl will have to help me. We may have different understandings of the word "conscience". I can understand, as I said, that many lone parents would prefer a clean break, with nothing to do with the individual father and, in particular if there is a new partner on the scene, would like him out of her life and to have another father support the child. I do not think that that is a choice she is entitled to make. It is not in the best interests of the child, of taxpayers and, sometimes, of the non-resident parent father.
	I do not accept the word "conscience". All that I understand by the word "conscience" means that I support those who are not autonomous adults against the often perverse will of autonomous adults; that is, I support children.

Lord Davies of Coity: Perhaps I may follow on from the noble Earl, Lord Russell. I understand the argument he advances in respect of the interests of the child. I do not think that any of us would depart from that interest.
	However, we also have to recognise that there are conflicting interests. We are addressing the interests of the child, the parent who looks after the child, the parent who is absent, the question of the responsibility under the Child Support Agency and the benefit provided by the state. Those are conflicting interests which have to be addressed.
	Clause 19 gives a degree of flexibility which enables each and every circumstance to be addressed in accordance with the way in which they are presented and have to be considered. In putting forward these amendments to Clause 19, we are placing too much emphasis on a particular interest when they all have to be, and will be, addressed under Clause 19 by the people involved at the time the circumstances present themselves. That degree of flexibility is necessary to make the provision work; otherwise it becomes totally inflexible and will never work.

Lord Higgins: As I said, this is essentially a probing amendment. It has revealed clearly that the position of the Liberal Party is not the same as that of noble Lords on these Benches. We are primarily concerned with ensuring that the absent parent makes a contribution to the child's maintenance. We believe that there is a case for penalties. But it is important for a specific penalty to be administered in a way which does not result in the bodies which deal with the problem at the front end saying that the decisions are not infrequently incorrect, unreasonable or inappropriate. It is in marked contrast with the view put forward by the noble Earl, Lord Russell.
	Before Report stage, I wish to consider carefully what the noble Baroness said. I do not find wholly convincing the argument that because no one who said that she was threatened with violence has been subjected to violence, that removes the fear of it.

Baroness Hollis of Heigham: I did not say that. I said that I was not aware of any case where a parent has had fears of violence and has been, so to speak, over-ruled and required by the CSA to co-operate. Women have decided to co-operate rather than receive reduced benefit. In other words, they have named the father. I simply asked: in that case, to noble Lords' knowledge, has the judgment of the CSA been at fault? I did not suggest the reverse: that sometimes there may have been a reduced benefit direction where, as the CAB suggested, there may have been grounds for a different response.
	The important issue is, where a parent who is reluctant to co-operate did co-operate because of the reduced benefit direction, was she, as a result, subject to the violence she originally feared? That would have suggested that the CSA was wrong to require her to co-operate. I have not heard a single piece of evidence today.

Lord Higgins: I understand that, but the reason that she did not co-operate in the first place may have been that she was afraid she would be subjected to violence. However, I shall consider the noble Baroness's point.
	The Minister was somewhat dismissive of the recommendation of the Select Committee in another place that there should be a delay before the new sanctions were fully operative. The Minister pointed out--it had not been clear previously--that the reduction of benefit applies to the benefit of the parent with care rather than the child's benefit. None the less if the parent with care was existing on the level of support which the Government regard as the minimum, and for a period of perhaps three or more years she has to live at substantially below that level, it is not clear how she will survive. There may be an argument for examining to what extent that has been a problem in individual cases.

Baroness Hollis of Heigham: The lone parent makes a voluntary choice not to co-operate with the CSA where there is no evidence that there is good cause or undue risk of distress. That penalty is £20 on an income of, say, £90 or so where there is one child plus housing benefit, council tax benefit and the like. In order to receive back the full amount, she has only to co-operate with the CSA. As I said, there is no case in which a lone parent has subsequently co-operated with a CSA where, to my knowledge, violence has been validated. Therefore, it is up to her.
	One could argue equally well that it is unreasonable, for example, that people in receipt of the jobseeker's allowance who fail to be available for work should be sanctioned, because they cannot live on a reduced benefit. One either accepts that benefits have conditions attached or one believes that benefit is a birthright. I happen to believe that it is perfectly proper for society to attach conditions that are appropriate to a benefit, as in this case, and that it is up to the lone parent to remedy the situation.
	We know that 70 per cent of those who have taken a reduced benefit come off that reduced benefit, if I can express it in that way, within a matter of a month or a couple of weeks. A third do so in order to go into work; some do so because, presumably, they are already re-partnering or have started to re-partner and therefore do not claim benefit at all; and a third decide to co-operate with the CSA. Therefore, many possibilities exist under which the lone parent may return to enjoy the full benefit. I agree that she should have it and it is in the best interests of her child to have it.

Lord Higgins: That does not cover the point that I raised: that, apparently, someone who is on the absolute minimum on which the Government believe anyone can reasonably exist then goes for some time--in some cases perhaps for three years--while being subject to a 40 per cent cut in that minimum level.

Baroness Hollis of Heigham: As I said, it is her choice. She simply has to name the father.

Lord Higgins: I understand that it is her choice. I ask simply how she manages to do it. Is there not a case for looking into that matter?

Baroness Hollis of Heigham: The problem arises from a failure to return the forms on time. How does she manage to live? It is a two-way process. If she wishes to receive the full benefit, there are conditions with which she must comply. She must return the forms, renew them appropriately, and she must attend a ONE interview, or whatever. That is essentially the case. I take the simple point that anyone who has an income which is less than income support is below the income support level. That is true by definition. The questions are: was it her own activity that put her into that situation; and, can she remedy it reasonably? The answer to both those questions is: yes.

Lord Higgins: I believe that there is no point in my continuing to make the same point over and over again. I still remain completely unconvinced by what the noble Baroness has said. However, having said that, I want to raise one final point. Perhaps we may then consider coming back to it on Report. Apparently, in a number of cases this situation has been continuing for three years and sometimes has been extended by three years. Of course, as the noble Baroness just said, it is true that in a number of cases results are produced in a matter of days, weeks or months. However, it seems that if nothing has happened by the end of three years, the person concerned is not likely to change his or her mind. Again, that is a point to which we should perhaps return.
	Having said that, there is a significant difference of opinion on these issues between the noble Earl and myself, and we shall need to read very carefully what the noble Baroness said. Subject to that, I beg leave to withdraw the amendment which has, I believe, given rise to a useful debate.

Amendment, by leave, withdrawn.
	[Amendments Nos. 95 to 102A not moved.]
	Clause 19 agreed to.
	Clauses 20 and 21 agreed to.

Lord Higgins: moved Amendment No. 103:
	After Clause 21, insert the following new clause--
	:TITLE3:COLLECTION AND ENFORCEMENT: PRIORITIES
	(" . After section 43 of the 1991 Act there shall be inserted--
	"Collection and enforcement: priorities.
	43A. In exercising his powers under sections 29 to 43 of this Act the Secretary of State shall ensure that such powers are exercised with a view to securing the collection and enforcement of child support maintenance from those non-resident parents who have failed to pay any amount of child support maintenance and that this duty is accorded priority over the collection and enforcement of child support maintenance from those non-resident parents who have made some payments of child support maintenance.".").

Lord Higgins: I believe that we can dispose of this amendment very briefly. The amendment seeks to establish the Government's priorities: whether, given the huge backlog within the Child Support Agency, they are going to concentrate on the collection of maintenance from the 30 per cent of cases where parents have made no payments rather than the 23 per cent where parents are partially compliant but not making full payments. Given the extent of the backlog, presumably some degree of priority will be established as to how the department proceeds. I merely inquire what instructions have been given to the department and its officials for the Child Support Agency and its officials.

Baroness Hollis of Heigham: Amendment No. 103 would require the CSA to set a priority order for the operation of its collection and enforcement activities. It proposes that they take action against non-resident parents who have made no payments regarding child support before turning to those who have paid some, however little. It may be of interest to the noble Lord to know that 47 per cent of non-resident parents who now pay through the CSA are fully compliant. In 1997 that figure was 30 per cent. Therefore, we have already gone a long way. Twenty-three per cent are partially compliant; 30 per cent pay nothing at all.
	Non-resident parents would be able to work out that if they made a token payment, that would move them to the back of the list of cases which the agency would be obliged to pursue. We all know that the complexities of the current formula leave the agency with little time for collecting maintenance. Too often, people have been able to avoid payment. Even where the assessment is completed, many NRPs fail to pay all that is due.
	When I visited a child support centre in Hastings, I was struck by the fact that approximately 90 per cent of the non-resident parents asked for a review of the amount that they were liable to pay because their circumstances had changed. The review was carried out and they still do not pay. Their requests were intended simply as a means of stretching out the process. Non-resident parents must not and will not be able to escape meeting their full responsibility by making an occasional payment. Therefore, I hope that the noble Lord will accept that the amendment is unnecessary.
	Under the new system, instead of 26 weeks, we expect an assessment to be made within four to five days, and the non-resident parent to pay within five to six weeks. Given that, the staff resource will be in compliance for all cases. It will not be the case, as the noble Lord feared may have happened in the past, that one simply adds to the payments required by those who are paying rather than chases those who fail to pay it all. Therefore, I believe that the amendment is unnecessary.
	Enforcement action will now be taken against all non-resident parents who do not meet their responsibilities because such a simplified formula will free the resource for such action. I do not believe that a legislative priority for collecting enforcement payments provides the best way to ensure that parents receive the maintenance which is theirs by right.
	Given that, I invite the noble Lord to withdraw his amendment. If he requires further information, I shall be very happy to try to provide it for him. However, by virtue of a simplified formula, the speed of assessment and the fact that we should be able to get money flowing from everyone, our whole push is that it should no longer be necessary to go after what some may have alleged in the past were the easy targets. As I said, we hope that we should not need to discriminate in a way that the noble Lord may fear has sometimes occurred in the past.

Lord Higgins: What are the priorities so far as concerns those who are on the old system?

Baroness Hollis of Heigham: We seek to obtain the money from all fathers. In the past, the priority has been to do so in private cases where the money is enjoyed by the family as opposed to cases where, for example, the father and mother are on benefit and where there is very little money involved. Therefore, in the past the priority has tended to be cost-effective: that is, to go for maintenance actions which are most likely to produce most money for children. If one must prioritise, it seems to me that that is the most decent way to do so.
	It is not a matter of saving the Treasury money. In so far as public cases have had a degree of priority, it has been a question of what money will benefit the children. That has been the situation in the past. However, in future, with a simplified system, we hope that those choices--I am not trying to suggest that it has been widespread--would not have to be made.

Baroness Carnegy of Lour: Does the Minister consider that the parents with care will believe that it is fair if the absent parent who has paid some money is traced just as quickly as one who has not paid any?

Baroness Hollis of Heigham: Is the noble Baroness asking me to change the situation for the future Bill or to change the situation as it is now? In future, there should be no question of prioritising. At the moment, in order to obtain an assessment of child maintenance it is necessary to acquire approximately 100 pieces of information from the non-resident parent. If he holds back only one of those, the money will be delayed. In future, only three pieces of information will be required from the non-resident parent: the name of his employer, details of his take-home pay and the number of children that he has.
	As a result, the assessment should be made within four to five days and the money should be flowing from him to the parent with care within four to five weeks, compared with the six months plus that it now takes. If it takes a long time at present, it is understandable that officials will go after the money which most benefits the child. That dilemma should not occur in the future under the new system. We have tried to construct a system in which precisely those difficulties do not arise. I hope that the noble Baroness will be content with that assurance.

Lord Higgins: In the light of the Minister's reply, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 25 [Regulations]:

Baroness Hollis of Heigham: moved Amendment No. 103A:
	Page 23, line 30, after ("section") insert ("6(1),")

Baroness Hollis of Heigham: This amendment gives effect to a commitment we made in Committee last week. During the debate on Clause 3 noble Lords expressed some concern about delegated powers set out in new Section 6 (1), which has been inserted in the Child Support Act by Clause 3. Concern was expressed in this House about how the power might be used and some Lords queried whether such a power was needed at all. As I explained to the House, we wish to be able to retain a power to add other benefits to those already in the Act should the need arise though we have no present plans to add to the list. It mirrors the formula we have in the Child Support Act 1991.
	I also explained that delegated powers are a feature of social security legislation, and that approach has been endorsed by the Delegated Powers Scrutiny Committee. However, in response to the concerns of your Lordships' House I gave a commitment that in future any regulations made under this power will be subject to the affirmative procedure even though that was not recommended by the Delegated Powers Scrutiny Committee.
	The amendment before us now places a reference to new Section 6 (1) and Section 52 of the Act as amended by Clause 25, that adds to the list of affirmative provisions. I hope that noble Lords will accept that we have responded positively to your Lordships' wishes.
	During a previous debate the noble Lord, Lord Higgins, asked me to consider whether we would amend the subsection so that any other means-tested benefit of a prescribed kind could be substituted for the current wording. I promised to reflect on this. Having done so, I do not think that wording would be appropriate because the benefits we define as means tested or income related are a narrow group of benefits such as IS or income-based CSM. Those two benefits are contained in new Section 6 (1) on the face of the Bill before us. We may want to add some benefits in future that are similar in nature to income related benefits but are not strictly defined as such, for example, WFTC which is not means tested but did replace a means-tested benefit called family credit. We do not intend to add WFTC, but there are a number of tax credit type benefits that are being considered. It is possible that more may be developed in the future. Therefore, a future government may wish to add it, but I must emphasise strongly that we have no such plans in mind.
	Secondly, and more importantly, not all income-related benefits currently in existence require a person to seek child maintenance, for example, HB or council tax benefits, and IRBs which are not expected to apply for child support. The noble Lord's definition might well bring in groups of people to whom we had not intended it to apply.
	I hope that on the first part, by making the regulation subject to the affirmative procedure, noble Lords will be satisfied that Parliament will be able to scrutinise any regulations made under this power and on the second part that we might actually be widening the scope beyond perhaps what the noble Lord intended. I hope that noble Lords will be able to accept this amendment and will accept the Government's response to the House.

Lord Higgins: We are grateful for that explanation. We will study what the Minister said very carefully.

Earl Russell: I, too, would like to thank the Minister warmly for that amendment and also for her further reflections. The Government say what I was afraid they would say, but a fact is a fact.

On Question, amendment agreed to.
	Clause 25, as amended, agreed to.
	Clause 26 agreed to.
	Schedule 3 [Amendment of enactments relating to child support]:

Baroness Hollis of Heigham: moved Amendment No 104:
	Page 99, line 17, at end insert ("; and
	(b) in subsection (1)(b), after "made" there shall be inserted "or, as the case may be, treated as made".").
	On Question, amendment agreed to.

Baroness Hollis of Heigham: moved Amendment No 105:
	Page 100, line 19, at end insert--
	("( ) In section 33 (liability orders), after subsection (5) there shall be inserted--
	"(6) Where regulations have been made under section 29(3)(a)--
	(a) the liable person fails to make a payment (for the purposes of subsection (1)(a) of this section); and
	(b) a payment is not paid (for the purposes of subsection (3)),
	unless the payment is made to, or through, the person specified in or by virtue of those regulations for the case of the liable person in question."").

Baroness Hollis of Heigham: This is the last of the amendments to the Child Support Act.
	Amendment No. 105 is a technical amendment to put beyond doubt the intentions when maintenance remains due if payment has not been made in the way that the regulations require it to be made. When the CSA is arranging the collection of child support maintenance, it will notify the non-resident parent of the amount, how and when the payments are to be made and who should receive them. The notification which imposes a legal obligation on the non-resident parent will state that the payments should either be made direct to the parent with care to or through the Secretary of State to any other such persons that the Secretary of State may specify.
	If the CSA is unable to obtain regular payments of maintenance, for example, where the non-resident parent is self-employed or where a deduction from earnings order is ineffective, enforcement action will be considered. The agency must, as a first step, obtain a liability order from magistrates' courts in England and Wales or sheriff courts in Scotland. Where such a liability order is considered being made the magistrates' or the sheriff's office have to be satisfied that the payments are due and have not been paid. The intention has always been that this means maintenance payments as directed by the CSA. However, some non-resident parents may claim that they have met their maintenance liability by making payment in a variety of other ways, for example, by giving pocket money direct to the child or paying for treats. To take such payments into account would be operationally difficult to manage and run counter to the objectives underlying the child support scheme. For example, the CSA might have to become involved in resolving disputes between the parents as to whether the payments had actually been made and, at the extreme, fathers could give all the maintenance to their children as pocket money and leave the mother unable to buy basics such as food and clothing.
	This amendment will ensure that it is absolutely clear to everyone, both parents and the courts, that maintenance payments must be made to the person specified.
	I would, therefore, ask your Lordships to accept this amendment.

On Question, amendment agreed to.

Baroness Hollis of Heigham: moved Amendments Nos 106 to 108:
	Page 100, line 36, at end insert (", and after "28A" there shall be inserted "or 28G"").
	Page 101, line 2, at end insert--
	("( ) In section 58 (short title, commencement and extent)--
	(a) in subsection (9), after "35" there shall be inserted ", 40"; and
	(b) in subsection (10), after "28" there shall be inserted ", 40A".").
	Page 101, line 5, after ("effect;") insert--
	("( ) in paragraph 14 (which provides for consolidated applications and assessments), the existing text shall be sub-paragraph (1) of that paragraph, and after that sub-paragraph there shall be inserted--
	"(2) In sub-paragraph (1), the references (however expressed) to applications for maintenance calculations include references to applications treated as made.";").
	On Question, amendments agreed to.

Baroness Amos: I beg to move that the House be now resumed.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.

Sierra Leone

Baroness Symons of Vernham Dean: My Lords, with the leave of the House, I shall now repeat a Statement on Sierra Leone which has been made in another place by my right honourable friend the Secretary of State for Defence. The Statement is as follows.
	"With permission, I would like to make a statement about Sierra Leone. In his statement last week my right honourable friend the Foreign Secretary informed the House about the serious security situation in Sierra Leone and the implications for British citizens and others for whom we have consular responsibility. He said that the British Government had taken the precautionary measure of deploying military assets to the region. British forces were deployed to allow for the safe evacuation of British nationals and other entitled personnel.
	"Essential to this task has been the securing of Lungi Airport which, as the Foreign Secretary said, will be extremely valuable in allowing UN forces to build up to their mandated strength over the next month. We have seen evidence of this in the recent arrival of two additional Jordanian companies, numbering some 300 personnel. This remains the clear and unambiguous position on the deployment of British forces. It was re-affirmed by the Prime Minister on 11th May, and it remains our position today.
	"I am confident that the House would agree that the deployment of UK forces to Sierra Leone has been an outstanding success. Faced with a rapidly deteriorating security situation, UK forces have evacuated almost 450 people. The airport was secured quickly and effectively. Although we have consistently made it clear that UK forces will not be deployed in a combat role in support of UNAMSIL, the presence of UK troops on the ground has helped stabilise the situation in Sierra Leone. We are providing technical advice to the UN as to how matters might be further improved. I would like to take this opportunity to congratulate the Armed Forces on the work they have done so far. It is a remarkable demonstration of their flexibility and speed of deployment identified as key requirements in the Strategic Defence Review. Both President Kabbah and Kofi Annan have welcomed the contribution that British forces are making.
	"The situation in Sierra Leone remains volatile and we must all be concerned about the situation, in particular, for the detainees. We have received reports that a number of UN personnel have been released, and I understand that the British officer, Major Andrew Harrison, is fit and well under the protection of the Indian battalion in the east of Sierra Leone. While this is welcome news, we continue to work for the safe release of all those currently being detained by the RUF.
	"Freetown remains calm but tense. Outside Freetown, clashes between government troops and the rebels continue. For the moment, the rebels appear to be on the back foot. The government of Sierra Leone and UN forces have retaken the initiative. The arrival of Jordanian reinforcements at the weekend has been a significant boost to the UN mission. Reports to me this morning from the Chief of the Defence Staff have been encouraging.
	"The forces we have deployed are those we consider necessary to carry out their primary task effectively. The First Battalion of the Parachute Regiment is currently shouldering the main burden in Lungi. But the maritime forces we have deployed--including our amphibious capability--provide vital flexibility for the Joint Force Commander in what remains a volatile and potentially dangerous situation. If attacked, our forces have the rules of engagement and firepower to allow them to respond robustly.
	"In that context, while our forces remain, we shall do what we can to assist the UN mission. Its success is essential to ensuring long-term peace and stability in Sierra Leone. UN forces have been doing a difficult job under uncertain and dangerous circumstances, disarming large numbers of ex-combatants despite not being up to full strength in terms of numbers of personnel and equipment. Our presence has helped to increase confidence and has contributed to the stabilisation of the situation.
	"As a result of our force's presence we have been able to give significant assistance. British officers are providing advice to UNAMSIL. They are giving technical military advice to the government of Sierra Leone, and to the UN in New York. We have assisted the UN with the transport of vehicles into theatre by air. We have airlifted 230 Jordanians by helicopter from the airport at Lungi to Hastings, where the Jordanian battalion is strengthening its position.
	"I recognise that there have been questions about the length of our commitment. The UN plans to build up its forces to the authorised level of about 11,000 over the next month. We are in contact with those countries that are contributing troops to the UN force, particularly with India, Jordan, Bangladesh and Nigeria, urging them to bring in troops as soon as possible in order to reinforce UNAMSIL. We would expect that once the UN mission has been reinforced by these troops, our role at the airport would no longer be required. I can assure the House that UK forces will stay no longer than is necessary.
	"However, even when our forces do withdraw, we will not be ending our political or diplomatic support for the UN and for Sierra Leone. When it is safe to do so, we will continue with our programme of assistance to help train and build effective, democratically accountable Sierra Leonean armed forces, which we announced in April.
	"We will also continue to contribute military observers to the UN mission, and if required, technical advice to UNAMSIL and other support.
	"I have made it clear that we are committed to the safe evacuation and protection of our nationals and to supporting the UN in its mission to restore stability in Sierra Leone. The deployment of British forces for a limited period on these tasks is a model of the rapid deployment concept that was at the heart of the Strategic Defence Review. It has been much admired and acknowledged by all concerned. Our Armed Forces are doing an excellent job, which is acknowledged around the world. But there is no question of the UK taking over the UN mission or of being drawn into the civil war".
	My Lords, that concludes the Statement.

Lord Burnham: My Lords, I thank the Minister most warmly for repeating the Statement made by her right honourable friend in another place.
	On Friday, while the noble Baroness did not answer many of the questions we asked, she gave us a very good sketch of what was going on in Sierra Leone. I am afraid that what the right honourable Member has said today has really not added anything to that.
	My noble friends and I asked the noble Baroness a number of questions which I must now press. The first can be dealt with quickly. Who is to pay for all this? Will it come out of the Ministry of Defence budget or the Foreign Office contingency reserve? I hope most sincerely that the Ministry of Defence will not have to pay for it.
	Secondly, I must return to what was a decent little skirmish between the noble Baroness and my noble friend Lord Attlee on the rules of engagement. Without intruding on private grief as to how it went, my noble friend did not press the matter but I am afraid that I must now do so. What are the rules of engagement in Sierra Leone? The Statement is less than clear about that. In what circumstances will British troops become involved? What if United Nations troops are attacked? That was a point which I raised on Friday, mentioning Zambians. I cannot remember whether Zambians are actually there. If a unit of the UN is attacked but the British forces are not, do they stand back and do nothing or do they become involved in the conflict?
	Those British forces have now done what they set out to do. British citizens have been evacuated and Lungi airport has been secured. Why, therefore, will they remain? What is the purpose of that? Reports show that British troops are patrolling in Freetown itself and in the countryside in support of the United Nations. That does not seem to be limited solely to the aims for which they have gone there.
	With those units has come a very large task force. Will Sea Harriers be involved and in what capacity? I am rather worried about the thought of keeping 1,800 Royal Marines on HMS "Ocean" for a month. I think there will not be very much left of the inside of HMS "Ocean".
	The period of deployment for which the British troops are there needs to be clarified. Is it to be four weeks, as we are told? What are they to do in that time? Will they then withdraw, regardless of the conditions? If they stay, what will be the effect on other countries planning to send troops as part of the United Nations force? It is inevitable, and always has been, that the British are carrying the bulk of the burden. That will not encourage other countries to send their people out at once. When we come to the end of the four weeks, how will the British troops get out? All those are vital questions to which I hope we shall have some replies.
	I must remind the Government of what happened in Bosnia. There, UN troops stood by while local inhabitants were massacred. Do British forces have a mandate to prevent that?
	In 1993, after the Somalia conflict, the Commons Foreign Affairs Select Committee produced a report in which it said that before the United Nations became involved in an area of conflict, that should be tested by the Security Council against the following key considerations: first, whether the UN has a role for itself in the conflict in question; secondly, whether the objectives of the proposed military intervention are realistic; thirdly, given the likelihood of escalation into more and more intervention of a political and military kind, whether the Security Council is prepared to recognised the full consequences. It then went on to state:
	"Finally, and most crucially, if the Security Council is so committed, are Member States prepared to mobilise the resources, manpower cash and equipment",
	and so on. Have the Government considered all those matters, as they should have done?
	I have one or two other small questions. What is General Guthrie doing there? The noble Baroness told me on Friday that his visit is coincidental and that he is travelling round the countryside. But it does seem a bit of a coincidence.
	Even Brigadier Richards seems to present a problem. He is in Sierra Leone primarily as adviser to the lawful government and to help the United Nations forces to get things right. Command of British forces was given to him as an add-on. He must be suffering from wearing too many hats. It is not easy for him.
	I suspect a lack of total co-operation between the Foreign Office and the Ministry of Defence. Can the Minister reassure noble Lords that those two departments are singing the same tune?
	I must and do pay great tribute to what British forces are doing. However, we have not been told what it is. I wonder whether the Government know.

Baroness Williams of Crosby: My Lords, I, too, thank the Minister for kindly repeating the Statement made in another place. We, on these Benches, fully support the actions taken by the Government. The collapse of the UN mission in Sierra Leone would have the most disastrous consequences for the whole of central Africa and for the United Nations.
	Those of us with long memories may recall what happened between the wars with regard to the situation in Abyssinia which heralded the end of the League of Nations. I believe that most of us would hate to see any such parallel drawn in the period after the Second World War. However, there are questions which need to be asked.
	The increase in morale among government troops and United Nations troops as a result of the appearance of the British Parachute Regiment and supporting naval and military forces has been remarkable. It is clear that both government forces and UN forces are fighting with a degree of commitment they simply did not show before. That, by itself, is an astonishing tribute to the organisation, effectiveness and efficiency of British troops, which I am sure all in this House profoundly welcome.
	Can the Minister confirm the most recent indications that, as a result of the intervention of Charles Taylor of Liberia, 150 hostage UN troops have now been released, or have the figures increased in the past few hours? Does the Minister agree that perhaps one of the less fortunate aspects of this welcome release of hostages is that Mr Taylor is a close ally of Foday Sankoh, who was the leader of the rebel movement? Can the Minister tell us whether she has any more up-to-date information about the whereabouts of Mr Sankoh? Perhaps I may suggest that it would be better to stop calling him "the leader of a rebel group" and call him what he is; namely, a bandit who has helped to betray his own government.
	I strongly agree with the question posed by the Opposition spokesman on defence, the noble Lord, Lord Burnham; we need to press a little further on the issue of the rules of engagement and on whether the UN mandate might be strengthened. Given the breaking of the peace agreement by one of its major protagonists, it becomes more and more clear that we are looking not at a peacekeeping effort but at a peacemaking effort.
	My final question is lengthy. It seems that the strategy of Her Majesty's Government--I may be misinterpreting it, but it seems a sensible strategy--is to hold Lungi airport and the surrounding area in order to ensure that reinforcements to the UN troops already in Sierra Leone can be made over the next few weeks. I understand that the governments of India, Bangladesh and Jordan have all confirmed their willingness to send additional troops. That is good news. If the UN can be built up to force, it may be able to re-establish an element of law and order and end the terrible atrocities occurring in Sierra Leone.
	However, as I understand it, there is one serious problem. To get to the airport, those countries will require heavy lift equipment which is not available to them. From reports which I have not yet been able to confirm, I understand that that equipment would be available from the United States but that the price being asked is beyond the means of those poor governments to meet. Is it not an essential element in the strategy of United Nations peacemaking and peacekeeping that the wealthy member states of the UN begin to understand that their responsibility must be to provide essential equipment to enable the poor member states of the UN to do what they are doing; that is, to offer their soldiers who are risking their lives? It would be absurd and wrong for the wealthy member states of the UN not to do what they can do; that is, to ensure that those troops get to Sierra Leone within the next month in time to rescue the situation.

Baroness Symons of Vernham Dean: My Lords, I thank both the noble Lord and the noble Baroness for the welcome they gave the Statement. Having just listened to his right honourable colleague in another place, I am bound to say that I was not tremendously surprised by the comments of the noble Lord, Lord Burnham. None the less, I was disappointed in the tone he took.
	It is not surprising that the Statement did not particularly add anything to what I announced to your Lordships on Friday. Another place did not have the benefit of a defence debate. I was therefore able to bring your Lordships more up to date than those in another place. I thought that that was the right thing to do. If that was a judgment with which noble Lords wish to quarrel, I hope that they will say so. I thought it was correct and what your Lordships would have expected.
	The noble Lord, Lord Burnham, asked who would pay for the operation. We are recording the costs involved. I can tell your Lordships that to date it looks as if about £3 million in extra costs have been identified. However, I am certain that further consequential costs will be identified. We have agreed with colleagues in Her Majesty's Treasury and the FCO to monitor such costs and shall decide attribution later.
	A great deal has been said about rules of engagement. The noble Earl, Lord Attlee, told me on Friday that he would not press that question. I am surprised that the noble Lord, Lord Burnham, decided that now is the time to do so. I informed your Lordships that there are robust rules of engagement. In my period in your Lordships' House--I am, of course, relatively inexperienced compared to the noble Lord, Lord Burnham--I have never heard your Lordships discuss rules of engagement in any detail. The reason for that is always that we do not want to undermine the operational effectiveness of our troops in theatre. If that has been true on previous occasions, it is equally true today. However, perhaps I can try to help the noble Lord a little further.
	I repeat that there is no question of UK forces being deployed in a combat role in support of UNAMSIL. I repeat that, if attacked, United Kingdom forces have the rules of engagement and the fire power to allow them to respond robustly, and they will do so. The rules of engagement allow our troops to defend themselves in the way we would expect. I hope that the noble Lord is content with that answer. Although I may be willing to trust the noble Lord with more information, I am bound to tell him that I would not be willing to trust the RUF with further information on that issue.
	Our troops remain at Lungi airport. I believe it was clear from the comments made last week by my right honourable friend the Foreign Secretary that not only are they there to secure the egress of British and other nationals, for whom we have consular responsibility; they are also there to secure the access of UN forces. That was made clear last Monday as it has been on every occasion on which Government Ministers have addressed these issues.
	The noble Lord asked about the presence of the Navy. The task force is there to secure flexibility for British troops. Let us not forget that when British troops went to Sierra Leone, we had little accurate information on what was happening on the ground. It was judged essential that we had the support of the British Navy offshore. That was the unanimous recommendation of the Chiefs of Staff. I believe that noble Lords would be extraordinarily disappointed and anxious had Ministers not taken that entirely sensible, right and proper advice.
	The noble Lord asked about the period of deployment. General Sir Charles Guthrie has said that United Kingdom forces would remain in place for around a month. In interviews yesterday I believe that my right honourable friend the Foreign Secretary said much the same. It is reasonable to suppose at this stage that the Government believe that it is important to have British troops in place in Sierra Leone for about that length of time. Of course we hope to see the imminent arrival of Jordanian, Indian, Bangladeshi and Nigerian forces. I do not believe that because we have gone in, others who have committed themselves in international fora to sending their troops will now decide that it is no longer necessary to go. I simply do not believe that that will be the case. We are urging those troops to move into Sierra Leone and it is for that purpose that we have secured the position at the airport.
	I believe that from the beginning the British role has been entirely clear. I am sorry that the noble Lord is worried about the position on HMS "Ocean". As I have said, the presence of the ship in the area is precautionary and the move has been made on clear military advice.
	I believe that I can be a little more welcoming in response to the remarks of the noble Baroness, Lady Williams. I agree with the noble Baroness that this has been a remarkable and effective operation by our British troops. I feel extraordinarily proud of them and I know that all my colleagues share those feelings. However, I have to say that I am sorry that the Official Opposition have perhaps decided to use this situation for political argument. I feel that that is inappropriate.

Noble Lords: Hear, hear!

Baroness Symons of Vernham Dean: My Lords, the most recent reports indicate that around 150 hostages--perhaps, more suitably, I should call them "detainees"--have been released. However, I must stress to the noble Baroness that that figure is unconfirmed. She will have seen press reports, but I am afraid that we do not have any confirmation on that point.
	The noble Baroness also asked me a question about Mr Sankoh. I shall choose my words carefully. At this stage I can communicate nothing to the House as regards the whereabouts of Mr Sankoh. I hope that what I have said in relation to the rules of engagement has given some assurance to the noble Baroness. The strategy she outlined in her remarks is indeed the strategy that we have put in place. Furthermore, as regards her comments about the need for heavy lifting equipment, this issue is covered by the logistics element of the role Her Majesty's Government have undertaken. The noble Baroness is quite right here. When a mandate is being pursued on behalf of the United Nations, it behoves all countries that belong to the United Nations to do what they can to support such a mandate. The United Kingdom has willingly shouldered that burden.
	Before I sit down, perhaps I may respond to the noble Lord, Lord Burnham, on the point he made about General Sir Charles Guthrie. Last Friday I told the House that a visit to the region had been planned by the Chief of the Defence Staff some time ago. I think it would be unthinkable that the Chief of the Defence Staff should not go to the region and visit British troops engaged in operations. After all, he is their head of profession. Those troops would expect to see him and we are very pleased that he is there. Furthermore, we are glad to see that he is lifting the morale of the troops in the way that only Sir Charles can. I for one was delighted to learn that he was broadcasting from Sierra Leone over the weekend.
	On the question of relations between the Foreign Office and the Ministry of Defence, I can assure noble Lords that there is in place a strong, good and worthwhile working relationship. I hope that the presence of my noble friend Lady Scotland on the Front Bench with me today demonstrates that.

The Earl of Onslow: My Lords, can the noble Baroness--

Lord Shore of Stepney: My Lords, I believe that it is the turn of noble Lords on this side to speak.

The Earl of Onslow: My Lords, why?

Lord Shore of Stepney: My Lords, we have heard the spokesman from this side, but we have not heard from the Back Benches.

Lord Bach: My Lords, perhaps we should first hear from my noble friend Lord Shore.

Lord Shore of Stepney: My Lords, I wished only to offer my congratulations and encouragement to my noble friend. She has made an excellent Statement. We have done our duty to safeguard our fellow citizens and others, but there is a wider duty that we must perform. My noble friend has made that very clear.
	We cannot afford to allow the United Nations to be humiliated and rebuffed in the mission it has undertaken. If we need to commit more forces in order to safeguard the position of the United Nations, I for one would be prepared to support that.
	However, I should like to make one point to my noble friend. I am not worried about our terms of engagement, but I am a little concerned about those of the forces of the United Nations. The entire situation has changed over recent weeks as regards the government of Sierra Leone, which previously were supposed to be a government of coalition and reconciliation. The second principal member has turned out once again to be an arch rebel and destabiliser. Frankly, I think that it would be most sensible if we could put out feelers for an early recall of the Security Council to see what other measures, both in its own interests and those of us all, might now be undertaken.

Baroness Symons of Vernham Dean: My Lords, I thank my noble friend Lord Shore of Stepney for those remarks. On the question of United Nations troops, the fact is that troop numbers did not build up as quickly as had been originally anticipated. Now that the security of the airport is assured, we hope that it will be possible to see the pace of deployment accelerated, in particular by those countries which have already committed themselves; namely, India, Bangladesh and Jordan. As I indicated in the Statement, over the weekend we saw the deployment of some 230 Jordanese troops precisely because the United Kingdom had already taken steps to secure the airport.
	As regards the position of the Security Council, this is of course a matter in which the UN will take the lead. It is the responsibility of the UN to ensure that this matter is kept under constant review. I am happy to say once again to noble Lords that the Secretary-General of the UN, Kofi Annan, has expressed his great pleasure as regards the United Kingdom role and deployment in Sierra Leone.

The Earl of Onslow: My Lords, perhaps I may put a question to the noble Baroness. The Statement announces the intention to "cover the withdrawal" and to "support the United Nations". Those two declarations are in fact mutually exclusive. We have just heard a plea from the noble Lord, Lord Shore, for imperial rule, more or less. The idea of Mr Cook as Secretary of State for India is something that would amuse me if it were not so sad.
	Can the Minister explain what would happen if we were to allow Mr Sankoh, who was forced back into power by ourselves--that was surely the equivalent of making Dr Shipman Minister of Health or Kenneth Noye Chancellor of the Exchequer--back into power again? Forcing him back into power would be a great mistake. What Sandline did to keep the old democratic government in proper order went by the board. Everything collapsed and Sankoh came back.
	Please can we have a definition of the Government's aims? Do they intend to go in to get British people out or do they aim a reimposition of an element of the imperialism so eloquently advocated by the noble Lord, Lord Shore?

Baroness Symons of Vernham Dean: My Lords, the noble Earl has stated that it is mutually exclusive to hold to the twin aims of evacuating British and other nationals for whom we have responsibility and supporting the United Nations. I simply do not know how the noble Earl has come to draw that conclusion. The fact is that we needed to secure the airport in order to facilitate the egress of our citizens and others for whom we had responsibility. Having secured the airport, it would be unthinkable not to keep it secure for the access necessary to the UN. Those two seem to me to be mutually supportive objectives and aims, and no matter how much the noble Earl may shake his head and assert the contrary, I am afraid that in logic, for once, the noble Earl is wrong.
	To turn to the question in relation to imperial rule, as we all know, the noble Earl has an excellent turn of phrase and can often be extremely amusing. But this is not a joke; it is a serious issue. It is not a question of the return of imperial rule; it is a question of doing what we can in the limited context I described of upholding the United Nation's mandate. We are a responsible member of the United Nations and are doing what we can in the circumstances.
	The noble Earl will know that Mr Sankoh's appointment was part of the Lome agreement; it was a part into which Mr Sankoh entered. Of course it is outrageous and appalling that he did not uphold the agreement and has effectively plunged the country back into civil war. But the noble Earl asks me to go on and speculate what may happen in various eventualities if Mr Sankoh were to do various things. It cannot be right for us to discuss such eventualities and I repeat what I said to the noble Lord, Lord Burnham. This is not a play in which we have a script and know to what end we are all going. This is military action on the ground. People's lives are at stake and I for one will not do anything that speculates in such a way that makes it less effective in operational terms to secure the safe return of all our British troops.

Viscount Slim: My Lords, I fully support the stance that both the noble Baroness and her right honourable friend the Secretary of State have taken over the rules of engagement; let the other side find out first.
	However, I take slight issue with the remarks of the noble Lord, Lord Burnham--I know he did not mean them--in relation to the Royal Marines on board HMS "Ocean". They will not be causing any problems; they will be training, keeping fit and getting as much sleep as possible because, if they are landed, they will get no sleep. They will also be planning for eventualities that may come. I say that because, when we read Hansard tomorrow, the noble Lord, Lord Burnham, may feel that his remarks make it appear as though matters of little consequence are happening on board that vessel. But it is right, when we do not know the end, to be flexible and to prepare for any eventualities that may come.
	To repeat something I said on Friday, involvement in a city or a town eats up soldiers. Fighting in built-up areas and in streets requires plenty of reinforcements. We hope it does not come to that. But the Statement is about right for what is happening in Sierra Leone today.

Baroness Symons of Vernham Dean: My Lords, I thank the noble Lord for those wise words. Like him, I am sure that the noble Lord, Lord Burnham, did not mean to imply anything that he will regret when he reads Hansard tomorrow in relation to the Royal Marines.

Lord Burnham: My Lords, I withdraw those remarks and apologise for my flippancy.

Baroness Symons of Vernham Dean: My Lords, I am sure that the noble Lord did not mean anything untoward. I know that he has the greatest respect for our troops and I am sure that, like us, he understands that they are doing an important job. They are training and keeping fit, but they are also providing for any additional flexibility that may be needed should the occasion arise. Of course, we hope that that does not happen, but the flexibility is available on advice.
	Perhaps I can assure the noble Lord that we will only fight in self-defence; that is, if we are attacked. I hope that the rules of engagement are absolutely clear to your Lordships. Of course, there are a lot of troops in place. Some noble Lords remarked on that on Friday. When one is securing the airport, it is necessary not only to have troops in the airport, but also to secure the access and egress of the airport and to secure communications between the airport and Freetown, which, as I explained, is difficult because of the geography of Sierra Leone. But I thank the noble Lord for his support.

Lord Avebury: My Lords, did the noble Baroness see the statement made by Solomon Berewa, the Attorney-General of Sierra Leone that, according to documents found in Foday Sankoh's house, he himself took 442 carats of diamonds between August 1999 and January 2000 worth around £150,000? Is not that the key to the situation? The RUF still controls the diamond-producing areas and as long as it derives revenue from that source it will continue to import arms illicitly from places like Burkina Faso, stemming from eastern Europe. We must deal with that question if Sierra Leone is ever to have permanent peace.
	Will the noble Baroness therefore answer my noble friend's question in relation to the terms of reference of the UN mission? Is it there to enforce the peace, as it has started doing already? If so, will it assist the Sierra Leonean armed forces to recapture the diamond-producing areas and thus cut off the sources of revenue from which Foday Sankoh continues this war? Will the British commander also assist in the rapprochement between Hinga Norman and his commodores and Johnny Paul Karoma of the AFRC, which again are instrumental to the success of the government armed forces, since they should present a unified front against the RUF instead of being divided into three parts as they have been up until now? Can the noble Baroness also reply to the question of my noble friend regarding the heavy lift equipment? How did the Jordanians who arrived over the weekend get to Lungi? What heavy lift equipment is available for bringing the other troops which have been promised and which she says will arrive in the near future?

Baroness Symons of Vernham Dean: My Lords, I would prefer to write to the noble Lord on the question of heavy lift. I do not feel able to tell your Lordships what heavy lift is available because I am not sure how much of our operational hand that will expose. I hope to be able to give the noble Lord details and put a copy of my letter into your Lordships' Library. But the situation being what it is, I prefer to take advice about any security implications that may arise on that question.
	I agree with the fundamental premise of the noble Lord. We have in the past had exchanges on Sierra Leone where the noble Lord centred his remarks on what happened in the diamond trade. I agree that the whole issue of diamonds has fuelled this appalling conflict for many years. I am sure it is the issue of diamonds that led to the disgraceful, rapacious greed demonstrated by certain members of the RUF in particular but no doubt others as well.
	To turn to the specific question, the UN troops are present to provide for the implementation of the Lome agreement, which provides for the permanent cessation of hostilities, disarmament, demobilisation and reintegration of all ex-combatants. As part of that, the creation of democratically accountable armed forces to protect the country is necessary. Of course, when trying to reintegrate members of the armed forces into society, we have to look at the ways in which that can be done, and that will mean diverting people's attention away from the disgraceful trade we have seen in diamonds to things which benefit the country as a whole. But that is a long process.
	The noble Lord and I have been exchanging comments over these issues for some two and a half years or so. But that does not detract from the wisdom of what he said; namely, that some solution to the problem has to be found. I believe that it is well understood in the United Nations that the diamond situation--I hesitate to use the word "trade" because that is a respectable word--and the disgraceful intercourse that exists in that respect must be addressed so as to bring peace to that unhappy country.

Baroness Whitaker: My Lords, I congratulate my noble friend the Minister on her strong presentation of the UK role. However, perhaps I may ask her a question about the evacuation process which, in general, has been carried out with exemplary speed by UK personnel. I have in mind the evacuation in relation to British nationals who are black. Complaints were expressed today on BBC radio that black UK people had been held back while white people were processed. There were also two examples in press reports of black people being held up when returning to the United Kingdom. Can my noble friend the Minister tell us what guidance is given to our authorities on the range of UK ethnicities?

Baroness Symons of Vernham Dean: My Lords, I can say, unequivocally, to my noble friend that I, too, heard that claim made on a radio broadcast this morning and was appalled by it. Naturally, I have requested information about the validity of that claim from my colleagues in the Foreign Office. I am assured that there was no discrimination of any kind during the evacuation. I believe that; I believe that there was no discrimination of any kind. Some 442 people have so far been safely evacuated to Dakar by official means--that is to say, the means provided by British troops. But, of course, other people may have evacuated under their own steam and may have travelled by civilian means.
	Our responsibility was to evacuate people for whom we have the consular responsibility--not just British people, but others as well--to a place of safety. Once in Dakar, it was for evacuees to make their own onward travel arrangements. Many did so and arrived in the UK soon after reaching Dakar, but many evacuees had little or no money. Those people were provided with hotel accommodation, while arrangements were made by our consular staff in Dakar for their onward travel to the United Kingdom. Foreign Office staff in Paris and London met those who were evacuated on Thursday and Friday. I can give my noble friend the assurance that there is no question whatever of any racial discrimination over evacuation.

Lord Blaker: My Lords, I have had the strong impression in recent days that there are more reports than there used to be about the activities of the SAS, its equipment and even its intentions. This seems to me to be undesirable. Can the Minister assure us that there has been no change of policy as regards the release of information on that sort of subject?

Baroness Symons of Vernham Dean: Yes, my Lords, I can. I, too, have been rather disturbed by some of these reports. I was most disturbed to hear a reference to special forces from the noble Lord's right honourable friend the shadow Secretary of State on a radio programme this morning. I thought that that was an astonishing reference for a responsible member of the Opposition to make. I should tell the noble Lord that such reports are not "reports" in the accepted sense of being official reports from the MoD, the Foreign Office, or anywhere else. There is a great deal of speculation about what is happening. In line with our predecessor administrations--and, I hope, our successor administrations--we do not comment on the activities of special forces.

Lord Hardy of Wath: My Lords, I welcome the Statement. It seems to demonstrate that the expeditionary capacity, which is part of SDR, is being maintained. Can my noble friend say whether there is sufficient flexibility in policy to allow the UK to contribute significantly to the maintenance of training and the enhancement of the strength of the regular forces in Sierra Leone so that, when we have gone, people are not left in reliance upon the irregular forces, which seem to be very irregular indeed? Would not that role be particularly appropriate for our European partners; indeed, could we not ask them to take a more generous interest in the matter?

Baroness Symons of Vernham Dean: My Lords, I believe that my noble friend Lord Hardy of Wath is quite right. Recent events have clearly demonstrated the need for properly trained, effective and democratically accountable armed forces in Sierra Leone. We still have plans to send a UK military advisory and training team to the country, whose remit will be to deliver what the armed forces of Sierra Leone need to ensure a lasting peace. As I reported when repeating the Statement and as was announced in April of this year, we remain committed to that aim. But the team's arrival in Sierra Leone is likely to be delayed if the security situation is deemed to be too volatile. I am sure that my noble friend will not be surprised--indeed, I hope that he is reassured to know--that no firm decisions have been taken on when the bulk of those personnel will arrive in Sierra Leone.
	I agree with my noble friend. All those who wish Sierra Leone well ought to be thinking about ways in which they can contribute to the civil well-being of the country. We must ensure that the armed forces, many of whom will have to be deployed in different ways in the future, are properly trained so as to secure a peaceful and democratic society in that country for the future.

Lord Burlison: My Lords, in line with the recommendations set out in the Companion, I have to tell noble Lords that the time limit of 20 minutes allowed for Back-Bench contributions has now been reached. We must move on.

Child Support, Pensions and Social Security Bill

House again in Committee.
	Clauses 27 to 29 agreed to.

Lord Goodhart: moved Amendment No. 109:
	Before Clause 30 insert the following new Clause--
	:TITLE3:
	:TITLE3:AGE ADDITION
	. For section 79 of the Social Security Contributions and Benefits Act 1992 there shall be substituted--
	"Age addition.
	79.--(1) A person who is above the specified age and who is entitled to a retirement pension of any category shall be entitled to an increase of the pension, to be known as "age addition".
	(2) Where a person is in receipt of a pension or allowance payable by the Secretary of State by virtue of any enactment or instrument (whether passed or made before or after this Act) and--
	(a) he is above the specified age; and
	(b) he fulfils such other conditions as may be prescribed,
	he shall be entitled to an increase of that pension or allowance, also known as age addition.
	(3) In this section "specified age" means an age specified by the Secretary of State in regulations.
	(4) Age addition shall be payable for the life of the person entitled, at weekly rates to be determined by the Secretary of State in regulations.
	(5) Regulations under this section may--
	(a) specify one or more specified ages at which age addition shall be payable;
	(b) provide for different rates of age addition to be payable for persons of different specified ages.".").

Lord Goodhart: I rise to make what is positively my first, but not my last, appearance in the debates in Committee on this Bill. The proposed new clause provides for age additions--that is, additional payments--that are to be paid to older pensioners as an addition to their basic state pension. It would be paid to everyone who is entitled to a basic state pension.
	The amendment is the same as one introduced by my honourable friend Mr Steve Webb in the other place. Formally, it does not specify the age at which the additions will be paid or the amount of such additions. Of course, the amounts will need to be flexible and will have to be varied from year to year. I should say that the current proposals of my party are that there should be an extra payment of £5 to single pensioners aged 75 or more. That £5 should become £7 when they reach the age of 80.
	We recognise the problems with financing earnings-linked increases in the basic pension, but we also recognise--and do so acutely--the serious problems of elderly pensioners. The present "age addition" of 25p per week payable at the age of 80 is obviously completely farcical and I believe has not been increased at all since 1971. Elderly pensioners are undoubtedly those who are most in need. If they have an occupational pension, they are likely to have the lowest. They are very unlikely to have a personal pension; certainly not one of any significant amount. Moreover, those in their 80s will not even have SERPS (or not SERPS of any significant amount) because in many cases they will have retired before that was introduced in 1978.
	In some respects, elderly pensioners have greater expenses, especially when it comes to heating and perhaps to some extent clothing. Therefore an additional pension for pensioners who are aged 75 and over will target those most in need without having to require them to submit to means testing. It will also greatly reduce the need for older pensioners to have to claim the minimum income guarantee.
	As pensioners get older, it becomes more difficult for them to get hold of forms, to understand them and to fill them in. I believe that much of the failure to claim MIG is due to difficulties with form filling which may deter people, particularly the more elderly pensioners, from claiming what are often relatively small sums which are payable.
	I should, however, add that, strong as the case is for age additions in any case, that case is made vastly stronger by the proposed introduction of the state second pension. There are two reasons why that is so. First, the state second pension will be earnings-related up to pension age by the revaluation of the earnings factors but will be price-linked thereafter. Once the state second pension comes into payment, it will increase annually only in accordance with prices and not in accordance with earnings. The minimum income guarantee, however, is likely to be earnings-linked. The result of that will be that people who start with a pension above MIG level will find that their pensions fall below MIG after a few years. The estimate is that this could happen after some 10 to 15 years, even for people with full contribution records who rely on the basic pension and the state second pension.
	I do not believe that that result is acceptable. The age addition should be fixed at levels which will prevent pensioners with full contribution records for the state second pension falling below MIG level. There is, I believe, also another reason why the state second pension makes the age addition particularly necessary; that is, that the state second pension, at stage 2, will cease to be an earnings-related pension, or a pension which has an earnings-related element in it, because the amount of pension at stage 2 will be linked solely to the notional lower earnings threshold--a figure which is currently £9,500.
	As I understand it, the lower earnings threshold will increase in line with earnings. The result of that will be, for example, that people who retire in the year 2020 will receive a higher state second pension than those who retire in the year 2010 and are still living in the year 2020. Of course, to some extent this problem already arises with SERPS but it is much less obvious because SERPS is earnings-related--as its name suggests--and therefore the spread of pension amounts among those retiring in any one year is wide. However, this problem does not arise with the basic pension because it is the same for all pensioners with full contribution records whenever they retire. Therefore someone who retires this year will receive the same basic pension as someone who retired 10 years ago.
	At stage 2, the state second pension will become, in effect, an additional basic pension. If those who retire this year were to get a higher basic pension than those who retired in 1985, I believe, frankly, that there would be hell to pay. If the Government are to stop short of a full earnings link for the state second pension while it is in payment, I believe that they must find some other way of providing larger pensions for older pensioners. I believe that this can, and should, be done by a substantial age addition.
	As we know, the Government face outrage over their 75p per week increase in the basic pension.

Baroness Hollis of Heigham: Did the noble Lord refer to the earnings-related state second pension, or did he mean the state pension? Will he clarify what he said in his previous one or two sentences? I believe that he referred to the state second pension; I think that he may have meant to refer to the state pension.

Lord Goodhart: I am not quite sure to which passage the noble Baroness refers. I said that in effect at stage 2 the state second pension will become an additional basic pension and will cease to have any earnings-related element.
	I believe that, particularly after the state second pension has ceased to be an earnings-related pension or have an earnings-related element, there will be serious problems because someone who retires in 2020 will receive a higher state second pension than someone who retires in 2010, even though in neither case is the pension earnings-related.
	Even if the present system was maintained, I believe that age additions are essential if the Government are unwilling to return to the earnings link for the basic pension. I also believe that the introduction of the state second pension makes age additions doubly important. Without them the unfairness to older pensioners will be built into the system and the state second pension simply will not work. I beg to move.

Lord Astor of Hever: The noble Lord, Lord Goodhart, put his case eloquently. We on these Benches share his concern for older pensioners. However, reluctantly, we are unable to support the insertion of the new clause. As he explained, it proposes that pensioners of a certain age should be entitled to a pensions increase. However, as the noble Lord said, the age and amount are unspecified.
	Furthermore, it is open-ended and would commit future governments to expenditure that might not be sustainable in the long run. The oldest pensioners are an important priority for these Benches. In the years 1997-98 the previous Conservative government targeted the oldest pensioners by increasing premiums for income support, housing benefit and council tax benefit. We feel that there are more effective ways to help older pensioners than this new clause.

Lord Brett: I find the amendment in the names of the noble Lord, Lord Goodhart, and the noble Earl, Lord Russell, superficially attractive, particularly as regards the desire to help poorer older pensioners. However, I question whether the age addition--whatever amount is suggested--would achieve that as well as the Government's current policy. Over the past two years the Government have tried to eradicate pensioner poverty by aiming policies at less well off pensioners, whether that be through reductions in VAT on fuel, the increase in winter fuel payments or the 10p rate of tax.
	The amendment, which contains elements which concern the Conservative Front Bench, does not target the poorest pensioners. Those on income-related benefits would not benefit at all from the provision that is proposed. Perhaps the simplest and the wisest policy is to try to do everything possible to overcome elderly pensioners' fear of filling in forms. Perhaps the Government should make an extra special effort to ensure that pensioners who qualify for the minimum income guarantee are given every assistance to enable them to claim it. I believe that the minimum income guarantee will be in the gift of governments in years to come. It can be made more effective provided we ensure that people understand the role it plays and their rights to it. I hope that the Minister will explain what plans the Government have to ensure absolute take-up of that benefit rather than go down the route of added payments at the age of 75 or 80.

Baroness Castle of Blackburn: As an 89 year-old it is obvious that this amendment has superficial attractions for me, if I understood what it committed the Government to do. As has been pointed out, it is totally vague and gives the Government a blank cheque to do nothing. However, I am sure they would seize on that avidly.
	The mover made it clear that he considers the amendment to be an alternative to restoring the earnings link, but it seems to me that it is a device for distracting attention from the division in the Liberal ranks. As I said on Second Reading, a large contingent of Liberal Democrat Members in the other place joined Labour rebels in supporting an amendment to restore the earnings link. I do not think this amendment would satisfy them as an alternative and it certainly does not satisfy me, so I would not dream of voting for it.

Baroness Carnegy of Lour: The noble Baroness has taken most of the words out of my mouth and said them very much better than I would have done. I hope that the problems of older pensions will not be discussed in terms of gimmicks. The amendment, with its free television licences and a heating allowance of £150, would help me every bit as much as pensioners who are much poorer. The benefits are not targeted. Perhaps the noble Earl could tell the Committee how it would be funded and how older pensioners could plan their retirement, when they would have no idea of the amount decided by the Secretary of State and at what age; otherwise, one cannot take the amendment seriously.
	The problems of older, poorer pensioners are great, as I know from a number who live near me. They are extremely grateful for a free TV licence and a heating allowance but wish to plan--and they will always want to watch television and it will always be cold in Angus. I do not believe that the amendment is the right way to assist pensioners. The public may regard its provisions as somewhat cynical. Pensioners want certain, targeted help so that they know what is ahead. I am sure that any serious government will have to think about that--including the present Government. If the Liberal Democrats really aspire to govern us, I do not think that they should table such an amendment. I am really quite shocked by it.

Baroness Greengross: There is a strong argument for any increases in state pensions to be for all older people, rather than targeting particular age groups. However, the benefits system already recognises the greater needs of the oldest, which is why income support is more for older pensioners and why rates of attendance allowance are higher according to need, which is often age-related. The Government have recognised that greater need in their provision of free TV licences for the over-75s, and that is what was behind the original 25p age addition on the state pension at age 80. That has been allowed to wither to such an extent that it has become an insult. Older people point out regularly to me and others that one cannot even buy a first-class stamp for 25p. It would be better either to resurrect the addition meaningfully or to get rid of it altogether.
	Today's oldest pensioners, especially women, are the poorest and would benefit particularly from the amendment. My concern is where to draw the line and at what level to pitch any extra help. More research is required into what is needed by older people at different ages. I shall return to that aspect when we debate Amendments Nos. 132 and 133.

Earl Russell: I shall respond briefly to the noble Baroness, Lady Castle. The amendment as drafted allows for regular uprating. I am sure that the noble Baroness would be the last person to query the importance of that opportunity. In Committee on the Welfare Reform and Pensions Bill last year, it was said that while we were not going to adopt the earnings link, it would be necessary in good years for earnings to be above the level of prices. Nobody knows how much above that level we might be able to uprate in future years. We would like to leave available the option of generosity where that is financially permissible.
	As to what was done by my right honourable and honourable friends on Report, I do not think that the noble Baroness understands the difficulties of being a third party in the other place, where there is no guarantee, as there is here, of being able to table amendments and vote on them. Our amendment in another place was not selected, so voting for the earnings link was the only way we could vote in favour of an increase in pensions. We thought that principle so important that it justified departing from our normal practice and policy. That may have been an unusual way of deciding the issue but in view of the concerns that we share, I hope that the noble Baroness will forgive us.
	I am sorry that the noble Baroness, Lady Carnegy of Lour, is so easily shocked. I shall not advert to incidents in past Parliaments. The noble Baroness knows that I could, but I shall not bother.

Lord Haskel: My noble friend Lady Castle is being a little hard on the Government in accusing them of doing nothing. They have uprated pensions, introduced a minimum income guarantee, and given better heating allowances and free TV licences.
	I share the concern of my noble friend Lord Brett. Although I welcome the Government's improvements to reduce pensioner poverty, my concern is that pensioners should claim the benefits to which they are entitled and that they should not be made to feel that they are receiving charity. Recent figures show that there is much variation in poverty within each group of pensioners. Offering the same benefits to all will not eliminate poverty. The only way to do that is to target the poorest pensioners and to make sure that they claim the benefits to which they are entitled.

Baroness Hollis of Heigham: The amendment relates to the increase in the basic retirement pension, known as the age addition, paid to people over the age of 80. The practical effect would be to remove the specified age from primary legislation and allow it to be specified by the Secretary of State in regulations. The amendment would also permit regulations to specify different rates of age addition.
	As the noble Baroness, Lady Greengross, said, it is difficult to defend the current level of age addition. The sum of 25p a week is nonsensical by anyone's reckoning. However, although I appreciate the desire to help the oldest in society, the amendment presents real difficulties. Our mixed strategy is more effective. The noble Earl's amendment overlooks the cohort effect, and the method of paying for it would undermine longer-term policies.
	My noble friends Lord Brett and Lord Haskel referred to the minimum income guarantee. We already have age-related premiums in the MIG and believe that that is the quickest and most effective way to help those in need. Through MIG, we increased income support for pensioners last year by three times the rate of inflation. This April it was increased in line with earnings. So, for example, a couple over 75 are getting through MIG nearly £18 more than they would under the retirement pension; and a single person over 80 is getting through MIG nearly £20 more than the retirement pension--and, incidentally, £9 more than a 65 year-old would get on MIG. We again expect to increase this by earnings next year. We shall further enhance the amount of the premium that older pensioners receive through MIG over other pensioners.
	We have invested much in the minimum income guarantee, but, as my noble friend Lord Brett rightly said, it is not worth a jot unless people claim it. So through the late spring and all summer we shall be writing to more than 2 million pensioners to tell them about MIG. The campaign will be supported by TV advertising and, for the first time, pensioners will be able to claim MIG over the phone by ringing the new MIG Telecentre in Newcastle. They do not need to go into a benefits office; they can claim it from the comfort of their home.
	We believe that providing help through MIG is the most effective way to help those most in need immediately. In the longer term, our radical pension reforms--in particular the introduction of stakeholder pension schemes and the state second pension--will ensure that everyone with a lifetime of work behind them will build up rights to a pension on retirement which will take them above MIG and ensure that they have an income above that level for longer.
	Over and beyond that, we have introduced other benefits--for example, the winter fuel payments, which are tax free and worth £150 to eligible householders from next winter; the introduction of concessionary bus fares; the free eye tests for the over 60s; the reduction of VAT on fuel; the tax changes which have cut the starting rate of tax to 10p; and the free television licence. As a result, we are spending an extra £6.5 billion on pensioner income this Parliament. Put broadly, half of that money is going on the poorest 3 million pensioners.
	Against this, I should like now to engage, as seriously as I can, with the propositions in the amendment of the noble Lord, Lord Goodhart. I take them very seriously. The noble Lord should consider that extending the payment of the age addition in this way would have a net annual cost of around £660 million. That is not my problem. My problem is, as was hinted at by my noble friend Lord Haskel, that the noble Lord--by repeating some of the proposals spelt out in much greater detail by his honourable friend, Mr Steven Webb, from another place, which were based on statistics produced by the last two pensioner surveys of the DSS--is assuming that age cohorts are an appropriate proxy for picking up the poverty of pensioners.
	It is true that older pensioners are poorer than younger pensioners--for example, they become poorer over time because they are less likely to be earning, as 65 to 70 year-olds often do; they are likely to have spent more of their capital; and it is likely that their occupational pension will have not kept pace with the general wealth of the country. But the offset against that is that we have seen across the country a huge increase in the number of occupational pensions over the past 20 years, as well as the higher state pension benefits and better housing. But it is true that older pensioners are poorer than younger pensioners.
	However, it is also true that women pensioners are poorer than men pensioners; and it is also true that single pensioners are poorer than couples. By using only the age proxy--which is what the noble Lord seeks to do--we will have exactly the same problems as we had with City Challenge and urban regeneration projects.

Lord Goodhart: I am most grateful to the noble Baroness. As to the use of age as a cohort, is it not the case that, because of women's greater life expectancy, a much higher proportion of the oldest pensioners are women and, therefore, an age addition helps not only the older pensioners but helps women disproportionately to men?

Baroness Hollis of Heigham: That is perfectly true. But the opposite is also true: we would probably do more to help poverty by giving all women pensioners, of whatever age, an increase of, say, £10, than to concentrate on the age cohort targets. It is arguable.
	I have some serious information for the noble Lord. I respect the fact that the diagnosis is connected with age and with gender, and I accept the fact that because women live longer than men they are more likely to be single. I do not disagree at all with that diagnosis; the noble Lord, Lord Goodhart, and his honourable friend, Mr Webb, are correct. However, whenever one goes for a broad-brush approach such as a cohort--as we have found, for example, in urban renewal projects and the like--if one seeks to concentrate money on poor areas to overcome the problem of individuals claiming it, the difficulty arises that more than half of all people live outside poor areas. Exactly the same is true of the noble Lord's amendment and age additions.
	Perhaps I may give him some figures on which he might care to reflect. The gap between age cohorts is far smaller than the income disparities within each age cohort. Let me give the facts. Let us take, for example, a single pensioner. The quintile--the bottom fifth of income--for single pensioners under the age of 75 is £70; for those over 80, it is £65. That is the gap for single pensioners. For couples the figures are similar: £133 for under 75s; £113 for those over 80. That is medium, quintile income; the net income before housing costs of pensioner units. So, by age, a gap between £133 and £113 in the bottom quintile for couples; and a gap between £70 and £65 for the under 75s and over 80s for single pensioners. That is the only difference one would pick up through age cohorts.
	But when one looks within each age cohort, one sees that for couples under 75--the ones that are getting £133--the top fifth would be getting £457. Extend that to the over 80s: for the bottom quintile couples it is £113, the figure I have given, but, for the top fifth, £348 is the median income. It is the same for singles. As I said, the bottom fifth of under 75s would have a median income of £70; but the top fifth would have £224. As to the over 80s, the bottom fifth would get £65; the top fifth £195. In other words, the inequalities within each age cohort approximate to a ratio of three to one, but the gap in median incomes between each age cohort is 20 per cent, 40 per cent or 60 per cent, according to how one calculates the figures.
	The policy of the noble Lord will not work. All it does is to pay some money to older pensioners who need it; it gives a lot of money to older pensioners who, given the figures, do not need it; and it ignores the poverty in younger pensioners, who need it but who will get nothing at all. There is more poverty within each age group than there is between age groups; therefore, as a result, any measure designed to tackle the poverty of pensioners by attaching more money to age will not be enough to help lift the poorest out of poverty; it will give a lot of money to those who do not need it; and it will neglect the poverty among poor pensioners, who will still need to claim MIG. The statistics do not sustain the noble Lord's argument.
	I shall be very happy to send him a copy of the statistics--I am sure that the noble Lord and his honourable friends will want to look at them--but, given my explanation, I am afraid that his amendment will not work.
	Perhaps I may give another example. Only 40 per cent of those over 80 are entitled to claim MIG; 60 per cent are not. Under the noble Lord's proposal, he would give them all a hefty lift. In other words, the greater inequality is within each age group rather than between age groups. I would suggest that the noble Lord's basic assumption is, therefore, invalid.
	It would still be the case that the majority of those over 75 and over 80 would be above the poverty line as measured by access to MIG. Equally, even given these proposals, four-fifths of over 75s and over 80s who were previously on MIG, would still need to remain on it because the noble Lord's allowance would not be sufficient to float them off. I suggest that that is not the right way to help.
	As I said, it could equally be argued that the money should be added for women. One would then have exactly the same problem; there would be greater discrepancies within genders than between genders age for age, quintile for quintile.
	I accept that this is a generational problem; I accept that 75 and 80 year-olds will always be relatively poorer than 65 year-olds. But this will not be so much because of disparities in income but because they are more likely to be widows and, as the noble Lord rightly described, given their greater frailty, they are more likely to have higher expenditure. That gap is closing and will continue to close given our proposals for the state second pension.
	Thus, my first criticism of the noble Lord's proposals is that they will not address poverty in the way he thinks that they will. The bulk of poor people will remain unhelped by his proposals--for example, those poor people who are aged under 75--and equally, in his method, he will be giving still more money to those who do not need it as opposed to those who do and, as a result, the poorest will still need a top-up.
	My second criticism of his proposals is that he has identified what I believe to be a temporary problem which will be overcome by the state second pension and our proposals for that and for stakeholder pensions. However, to my dismay, he is proposing to fund those schemes--at least in the Steve Webb paper--by abolishing the state second pension and SERPS. That means of solving a temporary problem--and inadequately--removes the possibility of a permanent and proper solution. I have the paper here and I shall happily quote it to the noble Lord.

Lord Goodhart: I never said anything about the abolition of the state second pension; it is not part of our proposal.

Baroness Hollis of Heigham: On the contrary, I have Mr Webb's proposals here and that is how he proposes to fund it. I am very happy to give the noble Lord a copy of his honourable friend's document on which his amendment was based, but let him be in no doubt that that is how it is proposed to be funded. Therefore, to solve a temporary problem, the noble Lord is proposing to remove the possibility of a permanent solution. Indeed, to solve the problem of pensioner poverty at ages 75 and 80, he will add to it at 65. Under these proposals, far more pensioners (both younger and older) will come on to the MIG and then, of course, will have to be lifted off it again. That is not to mention that the natural consequence will be that if you abolish SERPS and the state second pension, you will have to remove contracted-out rebates, which is the equivalent of SERPS for private pensions, which will have a devastating effect on private pension provision. Stakeholder pensions will flop, additional private pensions would stop and many occupational pensions would be scaled back. I just wonder whether the noble Lord and his honourable friend Mr Webb have considered the read-across and what it would mean to occupational pensions, many of which are funded, as he will know, by the contracted-out rebates which bear the read-across from SERPS, which would be abolished under his proposals to fund schemes which would not address poverty as he believes they would.
	Although I accept the noble Lord's diagnosis of who the poor are, I would suggest that the MIG approach, which identifies poverty wherever it occurs--at 65, at 75, at 80, among women, among men, in London, in Lancaster--is a more decent way of responding to it than are any of the proxy poverty solutions, such as age-related rebates which, as I say, will not help the poorest but will give a lot of money to those who do not need it because income discrepancies are wider within each age band than between age bands. As a result, I hope that, on reflection, he will not wish to pursue this. What my noble friends have made clear tonight--and they are right--is that MIG is the right and decent way to identify poverty wherever it occurs, but we have an obligation to ensure it is claimed easily, transparently and simply so that every pensioner who is entitled to it receives it. In addition, we have a responsibility to those just above the MIG lines, whether through savings or modest earnings or income. That situation will be taken on board in our future proposals for pensioner credit. In that way, we will target poverty where it is, without stigma, without difficulty and without damage while not subverting the possibility of lifting future generations out of poverty, which is what our state second pension and our stakeholder pensions will do.
	In the light of that additional information, I hope that the noble Lord will feel able not to pursue his amendments.

Lord Goodhart: The Minister has always been extremely eloquent on this matter. I welcome the support which the noble Baroness, Lady Greengross, gave to this amendment. I am disappointed, but not altogether surprised, at the lack of support from other Benches. I entirely understand the position that the noble Baroness, Lady Castle, has taken. That is entirely consistent with the viewpoint which she has expressed throughout. So far as the position of my party is concerned, if the Government are unwilling to give any assistance on this particular point, it is very likely that we would--

Baroness Hollis of Heigham: I want to respect the courtesies of the House, but does the noble Lord accept anything that I have said tonight about the problems inherent in his amendment which show that his amendment will not do what he thinks it might do, which is tackle pensioner poverty? Does he accept that?

Lord Goodhart: I shall take this in order. The position that has been taken by the Minister is of course entirely consistent with the line that the Government have been running.

Baroness Greengross: I did not say that I supported the amendment. I said that it had a number of attractive elements and that some of those are already part of the Government's policy, but I do have concerns about it.

Lord Goodhart: What I meant to say in reference to the noble Baroness, Lady Greengross, was that support meant support in principle rather than for the ideas behind these amendments, in particular for an age-related addition rather than for the specific details of this amendment. I understand, as I said, the position of the noble Baroness, Lady Castle, and have, as we may find when we reach later stages, some sympathy for it.
	The position of the Government is that everything must be concentrated as much as possible on the minimum income guarantee as an attack on poverty among pensioners. I quite accept that--I think it is a matter of common sense--but the differences within the age cohorts is indeed wider than the differences between them, that is perfectly true. If the argument put forward by the Minister is taken to its logical extreme, you begin saying that you must rule out free television licences for all pensioners at the age of 75 and restrict them to those in receipt of the minimum income guarantee; you also have to say that you rule out the winter fuel allowance for all pensioners and restrict it to those in receipt of the minimum income guarantee; and indeed you go beyond that because ultimately that particular argument leads you to say that there will be no state pension at all and that all pensioner benefits will be provided through income support (under the minimum income guarantee) and will be limited to those pensioners who satisfy its income requirements. I believe that that would not be acceptable in this House.

Baroness Hollis of Heigham: Perhaps I may make it clear that the Government have no such intention. The Prime Minister has repeatedly made it clear that the basic state pension is a building block within the overall prosperity of pensioners and will remain so.

Lord Goodhart: Of course I accept that. I was merely pointing out that this is the logical conclusion to which that particular argument leads. The question surely is: what is the right balance between means-tested benefit for pensioners through the minimum income guarantee and non-means-tested benefits? The Government have put forward what I certainly regard as being an interesting and in many ways excellent proposal for the state second pension, but surely the aim must be, among others, to provide people who have full contribution records with a pension that will enable them to get to the end of their lives without having to rely at some point on means-tested benefits. Means-tested benefits may be necessary and will be necessary no doubt for those without full contribution records, but the state second pension is designed--and, I think, designed quite effectively, at the beginning--to take people outside the need for MIGs. The problem is that as people get towards the end of their lives and find it more difficult to claim means-tested benefits, they will have to fall back on them. When the Minister says that only 40 per cent of those over 80 are in receipt of the minimum income guarantee, my reaction is that 40 per cent is an enormous figure. It is far larger than the proportion of people in the population as a whole who are reliant on income-related benefits. It seems to me that the case--

Baroness Hollis of Heigham: I also gave the noble Lord the figure that, for a single person over 80, the difference between MIG and the retirement pension was nearly £20. Under the noble Lord's proposals, that single person would get only £7, so he would still need to be topped up between £7 and £20. Anyone who would currently qualify for most of MIG would still need to qualify even under the noble Lord's proposals.

Lord Goodhart: The triggers I have in mind take into account the fact that people will be better off under the state second pension. That will mean that the difference should diminish. We need to ensure that pensions are set at a level which will make it unnecessary for people who have paid full contributions, including the contributions to the second pension, to rely on the minimum income guarantee. That is important. The Minister's argument, taken to its logical conclusion, means that all benefits for pensioners should be provided by the minimum income guarantee.
	I shall take the amendment away and look at it again.

Baroness Carnegy of Lour: How will the plan be funded?

Lord Goodhart: It will require only a relatively small addition. It is much less expensive than providing an earnings link for the whole of the pension.

Lord Higgins: That would make it cheap.

Lord Goodhart: Of course it makes it cheap. We regard this as being targeted on those who are in particular need. It will help a much higher proportion of those who are in particular need.
	As I said, I shall take the amendment away and look at it again. However, it is very likely that, either in this form or in another, we will come back to it at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 30 [Earnings from which pension derived]:
	[Amendment No. 110 had been withdrawn from the Marshalled List.]

Baroness Turner of Camden: moved Amendment No. 111:
	Page 27, leave out lines 9 and 10.

Baroness Turner of Camden: The intention of this amendment is to extend the categories of people who will be credited with benefits in the state second tier pension despite having insufficient earnings. The proposed amendment removes the reference to earnings over the lower earnings limit. It therefore gives deemed earnings to anyone with earnings under the lower earnings threshold. As I understand it, this would benefit principally the unemployed.
	The real purpose of the second tier state pension is as much to fill the gap left by the erosion of the basic state pension as to provide a replacement for SERPS. In judging the adequacy of the Bill's provision in respect of granting credits for non-earners, the yardstick therefore should be the groups who would now be credited for the basis state pension. People signing on as unemployed are credited with full NI contributions each week.
	The Government may feel that to give credits to the unemployed would be a disincentive to work. However, we are not talking about immediate benefits but deferred benefits in retirement. For most people who are unemployed the idea of making pensions contributions is quite out of the question. I therefore hope that the Government will see that there is justification for this small amendment and respond positively to it. I beg to move.

Lord Higgins: I have pointed out on previous occasions that the Bill is very much a package, with virtually no connection between the child support part and the pensions part. I hope therefore that the Committee will allow me just a moment or two to elaborate on the point made by the noble Baroness in explaining her amendment.
	As she rightly said, it relates to the state second pension and she wishes to extend the provision for deemed contributions to a wider group than those covered by the Bill as it stands. My understanding throughout has been that the Government's strategy is effectively to have three levels of pension: a second state pension for those earning less than, in broad terms, £9,500 a year; a stakeholder pension for those earning between £9,500 and £21,600; and either personal pensions or company pensions for those above; in other words, what one might reasonably describe as the middle and upper earnings levels. I was therefore surprised by the speech of the Secretary of State, Mr Darling, to the National Association of Pension Funds. It may be helpful to quote a small passage in full and then, on the basis of what I have just said, ask the noble Baroness to clarify the position.
	Mr Darling said:
	"And from 2002, 18 million people will gain from the new State Second Pension ... That's why we've introduced Stakeholder Pensions--to give more choice to 5 million people. We'll continue to work with you to make pension provision better".
	Two points puzzle me. The first is the statement that from 2002,
	"18 million people will gain from the new State Second Pension".
	My understanding is that, even with the amendment we are now considering, no one will gain in the sense of receiving benefit from the state second pension in 2002, not least because we do not know when the state second pension will come in. The Government have said that it will come in when the stakeholder pension is established.

Baroness Hollis of Heigham: In stage 2.

Lord Higgins: In stage 2, yes. When will we know that the stakeholder pension has been established as far as concerns stage 2 of the second state pension and how are we to tell that that is so?
	Another point puzzles me in Mr Darling's speech. He said:
	"But we want moderate and higher earners to get into funded pensions. That's why we've introduced Stakeholder Pensions--to give more choice to 5 million people".
	Apparently, Mr Darling is now saying that the stakeholder pension is for moderate and higher earners to get funded pensions. That is not what he intends.

Baroness Hollis of Heigham: I do not know whether the speech was accurately reported. The noble Lord's original description was correct: the state second pension is for those earning--not those not earning--up to £9,500 and stakeholder pensions from £9,500 to £21,000. The issue of the debate between us may be merely at what point is moderate to high. But there has been no change in any of that.

Lord Higgins: But as I understand it, this was the information in the press release issued by the department. Perhaps the Minister will tell the Secretary of State that her understanding, if not his, is that stakeholder pensions are not for middle and higher earners.

Baroness Hollis of Heigham: But they are for moderate earners. The conjunction may be where someone is regarded as a higher earner or simply above the average or median earnings line. Let me give the reassurance that nothing has changed. The noble Lord's original description was exactly right. All we may be discussing is at what point we classify someone as being a higher earner as opposed to being a moderate earner.

Lord Higgins: That reply is helpful because the matter will arise in subsequent debates.
	There is another problem directly related to a point made by the noble Baroness in moving the amendment. One of the main arguments put forward by the Minister in response to the noble Baroness, Lady Castle, is that there is a huge advantage in the state second pension because people are deemed to have made contributions who were not able to do so under SERPS. The amendment seeks to extend that even further. But it still raises the question of whether, when the second state pension finally comes to fruition, we shall find that it is above the minimum income guarantee.
	The state second pension will be a flat-rate pension. As I understand it, it will not be uprated in line with earnings. So the Government's apparent munificence in saying that they will give more for carers, the unemployed or whomsoever may turn out not to produce any real benefit at all at the end of the day. It could be purely a paper operation because of the interrelationship between the non-earnings related benefit and the earnings related minimum income guarantee. Some important issues arise in the context of the noble Baroness's amendment which we need to get clear in our minds. It may be that in reality her amendment costs the Government nothing, but in reality it is also the case that the people she wishes to help get nothing at the end of the day.
	Perhaps I may make one other broad point. We do not know what the liability will be either of the noble Baroness's amendment or of what is proposed. I was going to say that I have been "lumbered"--I think that would be the right expression--with the Government Resources and Accounts Bill as well. The departments really ought to start working on estimates of the liabilities for the government as regards the state second pension. If we are to have a government balance sheet, it is not enough to have a marvellous document setting out the assets; we ought probably to have an equally thick document stating the liabilities which both the noble Baroness who moved the amendment and the Minister seem to be piling up for us in the future.

Baroness Hollis of Heigham: Amendment No. 111 seeks to exclude the requirement for low earners to have earnings at or above the annual lower earnings limit to benefit from the low earner's boost to £9,500.
	But the state second pension is a contributory benefit based on earnings factors. To have an earnings factor a person must have had earnings on which national insurance contributions have been paid or treated as paid. Therefore, the effect of the amendment would be to give the low earner's boost to anyone who had as little as one week's earnings in a year over the weekly lower earnings limit (£67 from 6th April).
	The Government want to help the poorest pensioners. That is why we have introduced the minimum income guarantee and the rest of the package. The basic state retirement pension is a secure foundation but it was never meant to support the lifestyle that most people want today. Most people have a second pension--60 per cent of pensioners have income from an occupational pension; others have income from savings.
	The Government believe that the best way to have secure retirement is to use the basic retirement pension as a solid foundation on which to build a second pension. That is what this Government's policies will deliver for millions of pensioners.
	Perhaps I may briefly explain how our proposals for the state second pension will benefit low earners. It will reform SERPS so that it refocuses help on those who need it most and who have the least opportunity to build up good second pensions themselves: 4.5 million low earners will get more than double what they would have received under SERPS; 2 million carers and a similar number of long-term disabled people will build up a second tier pension for the first time. I was pleased that the noble Lord, Lord Goodhart, felt able to welcome our proposals for the state second pension.
	I should like to remind the Committee that, without our pension reforms, by 2050 around one in three pensioners would have to rely on the minimum income guarantee. Our reforms will reduce that proportion from one in three to one in five. We shall be lifting over 2 million pensioners off MIG, and people will remain above it for a considerable time.
	Let us take, for example, someone who earned as little as £3,500 throughout their working life (£60 to £70 a week). That person will retire on a combined pension of £85 a week in today's earnings terms and will stay clear of the minimum income guarantee for nine years. Couples do even better. Their pension will keep them above MIG for 21 years. Most people over 65 are in couples; they are not single people. The reference will be to single people when the earnings period relates to the late 1970s and the 1980s.
	Members of the Committee, and certainly my noble friend, will recognise that it is a fundamental principle that someone in an earnings related pension scheme cannot build up a pension which is more than his or her average weekly earnings. The amendment would give the low earner's boost to anyone who had as little as one week's earnings in a year over the weekly lower earnings limit (currently £67).
	There would be every incentive for the economically inactive to find part-time work for a single week just to qualify for the state second pension. We should not forget that the retirement pension is a contributory benefit and that it is not possible to get a qualifying year for basic pension on the basis of one week's contributions alone. But this amendment would give a year's entitlement to the state second pension for precisely that--only one week's contributions. So someone who had only ever earned the equivalent of £67 for one week in a year (an average of £1.29 a week) would receive a state second pension of £54 a week. As well as being costly, that cannot be right in principle in an earnings related second pension scheme. Or, more typically, someone who earned £40 a week--for example, 10 hours at £4 an hour working in a cafe, and who worked a fortnight during the summer and received £80 a week--would under my noble friend's amendment receive a state pension of £54, higher than her average earnings of just over £40 a week. It cannot be right to have a pension scheme which produces a higher pension than a person would have earned in earnings alone, when it is meant to be an earnings- related pension.
	Perversely, the amendment would not include those who had earnings of less than £67 for every week of the year. So someone earning £50 a week, or £3,000 a year, would not benefit, but someone earning only £70 in one week and nothing for the rest of year would.
	If the aim of the amendment is to target the poorest employees, regardless of the contributory principle, it is likely to be wide of the mark. Many of the lowest earners are to be found in households with another higher earner, or where there are other sources of income.
	Indeed, many of the poorest pensioners would not benefit from the increase to their state pension income at all, particularly where they do not have entitlement to a full basic pension. That is because it is taken fully into account in assessing entitlement to income related benefits, so their overall income would not increase.
	The basis for calculating the state second pension will be the same as that for SERPS; that is, the earnings factor--it is an earnings related pension. The amounts are all based on the earnings on which someone has paid national insurance contributions in the course of a year; they are calculated on an annual basis.
	So to calculate entitlement to additional pension under state second pension on a weekly basis, we should need to revise the entire way we calculate additional pension. It would mean assessing pension entitlement on a weekly basis which would hugely complicate the assessment of entitlements and place an impossible burden both on employees and on our operational systems. For employers, the collection of information would be mind-boggling in its complexity. And it would require the Inland Revenue to record that information on every person's account. That is 52 times the amount of work involved in the current annual system.
	We believe that our proposals for the state second pension strike the right balance in providing extra help for those who need it most and the prudent use of resources. It has been widely welcomed. It is the building block on top of the state retirement pension which in future will take so many of our older pensioners out of poverty. On the basis of my explanations, I hope that my noble friend will withdraw her amendment.

Lord Higgins: I have listened with care to what the Minister has said. However, if I understand it correctly, she has related the amendment entirely to stage 1 of the second state pension. She has not related it at all to stage 2, when it ceases to become earnings related, and much of the argument that she has advanced becomes irrelevant. I may have failed to understand the point, but that seems to be the case.
	The noble Baroness referred to the second state pension as a contributory benefit. We have often discussed what that expression means. The noble Baroness must, surely, distinguish between a contributory benefit and a deemed contributory benefit. I am not sure how to word it. The Government have already gone down that road. However, it is still far from clear whether, even if the Government deem the contribution to be made, it will cost them any money because at the end of the day it is merely offset by the minimum income guarantee; or whether carers, who are to receive the marvellous help (as everybody describes it) from SERPS and so on, will benefit.
	The noble Baroness put forward a number of figures to show the proportion of people who would fall outside the minimum income guarantee. I do not have the exact figures before me. I believe that reference was made to one in five. At all events, the Minister argued that there would be far fewer people subject to the minimum income guarantee. As to stage 2 of the second state pension, that depends on what assumptions are made about prices and earnings respectively. I am not clear what assumptions the Minister makes, and perhaps she can tell the Committee.

Baroness Hollis of Heigham: I believe that that would entail another half-hour speech, which I am not sure the Committee would welcome. There may be some misunderstanding about what is entailed by stage 2. Under stage 1 anyone between the lower earnings limit and £9,500 will receive a state second pension as though he was earning £9,500. That is the low earnings boost. Although it is tapered, it continues for those between £9,500 and about £21,000. Therefore, there is still an incentive to remain within the scheme. We expect that under stage 2 there will be a flat rate beyond the £9,500 level which will not be earnings-related. Therefore, there will be greater attraction to move into a stakeholder pension or alternative vehicles for pension provision. It will not affect those who are under the £9,500 level. The basic thrust of the proposal, which is to use the state second pension at both stages 1 and 2 to address pensioner poverty for those with earnings of less than £9,500, remains unchanged. The change is related to what happens to those over £9,500. I hope that the noble Lord is content with that explanation.
	As to the noble Lord's second point about the deemed contributory benefit, frankly, when we began to construct the contours of a pension arrangement of this kind the first option was to address only those in waged work. I recognise the work of my noble friend Lady Pitkeathley and that of the Carers National Association. The Government were persuaded that they should pay ICA precisely because they recognised that it was work, albeit unwaged. That is recognised by a substitute income. We believe that it is right, decent and proper to regard the receipt of ICA as a deemed payment, in the same way that disabled people with a fairly close connection to the recent world of work should not be disqualified because they subsequently go on to IB.
	My noble friend's amendment proposes in effect that everybody should get the state second pension, because a person gets it if he is also unemployed. In a rather subtle way my noble friend seeks to ensure that everybody has a basic state pension which is at least as generous as the basic state pension and the state second pension put together. At that point the connection between earnings, the world of work and the earnings-related principle goes out of the window. Perhaps that is what my noble friend seeks to establish, but that is not a principle which features in the Government's policy. We believe that the state second pension is for those who have been in the labour market but whose earnings are so low that, if they had the older style SERPS pension, their pension would still keep them in poverty for far too long. As a result of our changes, under SERPS someone who earned £6,500 would have received about £12 or £15, whereas under our proposals he will receive £54. I hope that as a result my noble friend will not pursue her amendment; otherwise, she will destroy, possibly quite deliberately, the whole purpose and thrust of the state second pension which has been so widely welcomed outside.

Lord Higgins: The noble Baroness still has not answered the point related to stage 2 of the state second pension. At that point it becomes flat rate. We do not want to perpetuate the argument. Perhaps the noble Baroness will be kind enough to drop me a line about the assumptions on which she bases her statement that that will be of benefit to carers because at the end of the day they will get more than the minimum income guarantee.

Baroness Hollis of Heigham: Basically, for every year of caring a carer will receive the equivalent of £1 of basic state second pension. I do not understand the noble Lord's bafflement. Up to £9,500 the position remains unchanged between stages 1 and 2. The flat rate element after stage 2 applies to those who would otherwise have received a state second pension if they had earnings of between £9,500 and £21,000 under stage 1, which is earnings- related. We seek to make it a flat rate for that group so that they are encouraged into stakeholder and funded schemes.

Baroness Turner of Camden: I thank my noble friend for the very extensive explanation that she gives of government policy. I am not entirely persuaded by my noble friend's response. The noble Lord, Lord Higgins, has referred to some of the points that I intended to raise. When moving the amendment I said I believed that the real purpose of the state second pension was as much to fill the gap left by the erosion of the basic state pension as to provide a replacement for SERPS. That remains my belief. My noble friend refers to the basic pension as the basic building block. That building block will erode, and government policy is based on the assumption that that erosion will take place.

Baroness Hollis of Heigham: To continue the metaphor, it is a basic building block but the superstructure will become larger and larger.

Baroness Turner of Camden: But the superstructure is intended eventually not to be earnings-related but to be a flat rate. Having read fairly extensively the government papers on this matter, the idea of having a flat rate appears to be that that will persuade most people to look to the private market; in other words, the present 60:40 relationship between public and private provision will be reversed. In 10, 15 or 20 years the majority of the population will not look to public provision but to occupational or private pensions or stakeholder pensions; in other words, they will have recourse to the market. Therefore, I suggest that to credit people who are unemployed in the way proposed in the amendment is quite reasonable. There will not be a basic building block worth mentioning. People will already be credited in relation to the basic building block as it exists now. Since the second state pension and the basic building block are likely to develop eventually into low-grade public provision, I propose that the crediting should be against future public provision as far as concerns the unemployed. I shall not press the amendment this evening, but I am not terribly happy with the Government's response. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Castle of Blackburn: moved Amendment No. 112:
	Page 27, line 23, leave out from ("year") to end of line 27.

Baroness Castle of Blackburn: Amendment No. 112 is extremely simple. I would have thought that the point raised by the amendment would attract the sympathy of the whole Committee, perhaps even of the Minister. The amendment seeks to simplify the provisions for crediting-in. We all welcome the concept of crediting-in. We contemplated that enlargement of our policy in 1974, but we had taken such a giant leap forward in the provision of state insurance, SERPS and all the rest of it that we knew we could not do it all in one go.
	If one has a provision for crediting-in carers it is only sensible to ensure that it is consistent throughout the whole area of pensions that we have been studying. Therefore, the purpose of the amendment is to provide the same criteria for crediting-in as exist in the basic state pension.
	I should have thought that the Government would have been only too eager to do that; otherwise there is a grave disadvantage as between the treatment of carers in the Government's new proposals and those under the basic state pension. I refer, of course, to the definition of a "carer" as someone who is in charge of a child under six. That is whittling it down somewhat, is it not? Under the provisions of the previous Labour government, carers were defined as those looking after a child under 16.
	Are the Government telling us that we shall be less humane to carers than we have been? When we discuss the great advantages of the government scheme over SERPS, for instance, we tend to forget that the Government are measuring themselves not against the original SERPS but the Thatcherite reduction of it. Under the original SERPS, the 20 best earning years was one of the greatest lifelines which could be thrown to carers and the disabled. We shall deal with the disabled a little more in the next group.
	I urge the Committee to share the view of my noble friend Lady Turner and myself, and I am sure of other noble friends, that the crediting-in of carers should not be limited to those in charge of a child under six years, with the assumption that after that no real caring is needed for an older child who is probably going through some of the stormiest developments in his whole life.
	It is a simple principle. I hope that the Minister will accept it. I beg to move.

Lord Ampthill: I remind the Committee that if this amendment is agreed to, I cannot call Amendments Nos. 113 or 114.

Lord Higgins: As the noble Baroness said, this is a relatively simple amendment compared with many before us. There is always argument as to whether it is best for mothers to stay at home or go out to work. The government provision seems to say that carers should go out to work after the child is six; they will no longer receive their deemed benefit contributions if they do not do so. On the other hand, it is probably true that if they go out to work at that stage, it may well be part-time rather than full-time work. Carers are more likely to work full time when their children are over the age of 11. It seems to me, therefore, that the noble Baroness's amendment has something to be said for it.

Baroness Hollis of Heigham: Will the noble Lord accept that in part-time work someone needs to work only 18 hours at the minimum wage in order to qualify under the lower earnings limit? The assumption my noble friend Lady Castle made, echoed by the noble Lord, is that the carer either stays at home or goes into full-time work. But he or she qualifies by working 18 hours at the minimum wage and for considerably fewer hours if he or she has a higher rate of pay.

Lord Higgins: Clearly for carers with children between the lower and higher age, the work is more likely to be part time than full time. However, I am happy to listen to the Minister's reply to the amendment.

Lord Goodhart: I speak to Amendment No. 114, grouped with the amendment. It differs from the noble Lord's amendment in only one respect. We propose that the crediting should extend to a carer who has care of a child under the age of 12, whereas in the noble Lord's amendment the age referred to is 11 years.
	I have a great deal of sympathy with the view of the noble Baroness, Lady Castle. Any mother who decides to stay at home to look after her child makes a sacrifice in terms of the potential income that she forgoes. It is not right that on top of that she should also be asked to forgo her right to a pension. The idea of crediting as regards people with those responsibilities seems to us right. The question is where to draw the line.
	The Government's view, here and elsewhere, seems to be that women should be given an incentive to go back to work as soon as possible. It seems perfectly legitimate for a woman with a child of six, seven or eight to decide to stay at home and concentrate on looking after her child or children. A child at primary school cannot be left to look after himself at home. In most cases, the child will have to be taken to school and picked up at three or half-past three in the afternoon. He will have to be looked after during the holidays. There are childcare facilities, but I do not think that mothers of primary school children should be required to make use of them or forgo their rights to the state second pension.
	Once the youngest child reaches secondary school age, there seems a case for saying that a mother can take at least a part-time job without regarding herself as not handling her children properly. But up to that age it seems to me wholly legitimate for a mother to be able to say, "I wish to be a full-time mother. I do not wish to take even a part-time job, and my pension rights should not suffer because of it".
	We have put the age at under 12 rather than under 11 because the child's first few weeks or months at secondary school may be a period of particular stress and difficulty for him or her, and it is appropriate that the mother, without loss of pension, should be able to stay at home as a full-time mother for that period. Nothing I have said is intended to indicate that mothers who prefer to go out to work are acting wrongly. But up to the age of 12 it should be for the mother to make the decision and she should not be put under any pressure by the threat of loss of pension rights.

Baroness Hollis of Heigham: Under our proposals, a person who earns less that the annual lower earnings limit (LEL) in a given year but who is looking after a child under the age of six and receiving child benefit will accrue entitlement to the state second pension in respect of that year. In effect, we are targeting extra help on people looking after children up to early primary school age. These amendments would extend that help to people looking after a child up to but less than age 11, 12 or 16 respectively.
	Under SERPS, every year that someone was out of work and looking after a child meant they got a smaller pension when they retired. That is one of the reasons why women, who are most often affected, get less from SERPS on average than men. Our proposals for the state second pension will help to address that problem. Almost 1.5 million women will benefit under these proposals. Five years out of work looking after a young child will be worth about £5 a week in state second pension when that woman comes to retire. Under SERPS, she would have got nothing for those years.
	With the state second pension we are seeking to give help to those who are least able to make their own provision for a second tier pension; that is, people who either cannot work or who are in work but on low wages. The first group includes carers and often mothers of children below school age, who have the least opportunity to work and to earn above the lower earnings limit. That is why they are a key target group for our help.
	As Members of the Committee will know, many mothers of school-age children--that is, children from the age of five--choose to combine their caring duties with part-time work. Many of those parents will benefit from the S2P low earner's boost, even though they earn as little as £3,500 a year. As a result of the minimum wage, someone will be required to work just over 18 hours a week in order to gain access to the state second pension boost. Those who earn above the minimum wage will, of course, gain access by working even fewer hours.
	Some mothers may choose to stay at home, even when their children are older. Some may have no choice because of family or other circumstances. Our intention is certainly not to criticise or punish them for that, and we are not doing so. Indeed, we are doing a great deal to help those mothers who choose to stay at home. That help includes big increases in child benefit--£15 for the first child; £10 for the second--and income-related benefits for children under the age of 11. As I say, we shall have virtually doubled their allowances between April 1997 and October this year.
	However, it is the case that three-quarters of all married women are in work and approximately two-thirds of all couple mothers are in work. My noble friend Lady Castle and other noble Lords are correct in saying that the employment rate of mothers who have a child under the age of six is lower than that of those who have children over the age of six. The employment rate of couple mothers who are in work, both part and full-time, with a youngest child below the age of six is about 54 per cent, whereas it is approximately 70 per cent when the child is aged six or older.
	Therefore, leaving aside the amendment moved by my noble friend Lady Castle, who would not qualify under the government scheme? So far as I can see, women with a youngest child over the age of six may not be in the labour market for one of three reasons. First, they may be women who would like to work but who have low employment prospects or other difficulties with finding employment; for example, they may have low skills. Certainly, the evidence from our New Deal is that that is the biggest obstacle to women--particularly lone parents--who want to enter the work market. We have developed the New Deal and its training facilities precisely to help people who wish to work but who currently cannot to join the labour market.
	The second group of mothers with children over the age of six who may choose or wish to stay at home when their children are older, unlike the vast majority of couple mothers, are those who have a sick or disabled child. Of course, they would be entitled to the state second pension if they claimed ICA or HRP.
	The third group of mothers who would not normally be in the labour market if their child is over six may be those from an affluent family who choose for the mother to remain at home until the children are older. Of course, where that degree of resource exists in the family, she could decide to maintain her second pension by means of a stakeholder pension scheme. In the case of a stakeholder pension, it will be necessary to save approximately £9 a week--that is all--in today's earning terms to provide the equivalent of the 10 years' cover, until the child is aged 16, that would be granted under S2P.
	Therefore, we are focusing the state second pension on those who care for children under school age in a way which matches the choices that most mothers make. Those who choose not to do what most mothers do--that is, they stay at home because they can afford to--can receive coverage through a stakeholder pension. If they stay at home because they need to due to disability or dependency of a child, they are entitled to receive credits for the state second pension through other routes.
	Most mothers take career breaks or periods away from work when their children are very young. Most mothers--70 per cent--return to work once their child goes to school. Such a decision is always a matter of individual choice. Entitlement to the state second pension would simply be one more factor for them to consider. As a result, we believe that we have the balance about right.
	As I said, there is the basic pension, which covers all contingencies; the state second pension, which is work- related; and there are alternatives for those whose children are older than six where either the child is needy by virtue of disability or where the income is such that there is no financial pressure. If mothers want to return to work but are impeded by virtue of their relatively poor employment prospects, we can help them through the New Deal. We believe that that is working with the grain of people's choices while respecting the situation for the taxpayer. In the light of that, I hope that Members of the Committee will not pursue their amendments.

Baroness Wilcox: Perhaps I may ask for a point of clarification. I more than likely misheard the Minister. Did she say that two-thirds of married women are working?

Baroness Hollis of Heigham: I actually said that three-quarters of married women are working. Overall, approximately two-thirds of mothers who are married are working. Of that amount, 54 per cent of those with a child under the age of six are working and approximately 70 per cent of mothers in a couple with a child over the age of six are working.

Baroness Carnegy of Lour: I do not know what the noble Lord, Lord Goodhart, intends to do with his amendment. However, when he made the point that he had worded the amendment so that it would cover children up to secondary school age, I would remind him that we are legislating for Scotland as well, where children go to secondary school a year later. Therefore, what he said did not apply to Scotland.

Baroness Castle of Blackburn: As always, the Minister's flow of statistics requires careful analysis. I do not know about the rest of the Committee but I find that when she speaks I am almost carried away on a flood tide of protestations which are so convincing that I am immediately suspicious of them. Therefore, I am sure that she will understand and forgive me--

Baroness Hollis of Heigham: I cannot resist. If my noble friend says that she is suspicious when she is almost persuaded, what happens when she is not?

Baroness Castle of Blackburn: "Almost persuaded"? I am sorry; I must be feeling rather stupid at this time of the day. I intend my remarks, as always, as a great compliment to the Minister. However, it means that I would like a little time to think through what she has said. Therefore, I withdraw my amendment for the time being.

Amendment, by leave, withdrawn.
	[Amendments Nos. 113 and 114 not moved.]
	[Amendments Nos. 115 and 116 had been withdrawn from the Marshalled List.]

Baroness Turner of Camden: moved Amendment No. 117:
	Page 27, line 29, leave out ("long-term").

Baroness Turner of Camden: In moving Amendment No. 117, which stands in my name and that of my noble friend Lady Castle, I wish to speak also to Amendments Nos. 118, 120 and 121, with which it is grouped.
	Again, these amendments deal with the whole issue of credits. The Government propose that state second pension rights should be credited for a year, throughout which a person receives long-term incapacity benefit. That would exclude the first year of a spell of incapacity during which short-term incapacity benefit is paid. It would also exclude anyone who receives incapacity benefit for only part of the year. The first of the two amendments would result in the whole year of incapacity, including the first year, being taken into account. The second would mean that a person who received long-term incapacity benefit for at least 26 weeks in any year and did not have earnings above the lower earnings limit for the year as a whole would qualify for credits. It would also apply to a person who receives short- term incapacity benefit for half the year and long-term incapacity benefit for the other half.
	Amendments Nos. 120 and 121 relate to subsection (3) on page 27 of the Bill. That subsection appears to introduce the labour market attachment test. People who propose to obtain state second pension credits in respect of a period of incapacity benefit will have had to pay contributions as an employee for at least one-tenth of their working life. That seems a little unnecessary and unfairly restrictive, and the amendment would remove that test. Amendment No. 121 would enable periods of self-employment to count towards the labour market attachment test. So far as concerns that particular amendment, I must say that I am not quite certain whether it works in the way that I intended. However, as I said earlier, the intention was that periods of self-employment could count towards the labour market attachment test, which is contained in subsection (3) on page 27 of the Bill. I beg to move.

Baroness Hollis of Heigham: Amendments Nos. 117, 118, 120 and 121 all relate to disabled people and entitlement to State second pension. Amendment No. 117 would mean that people entitled to short-term incapacity benefit were brought into State second pension, whereas under our proposals access is limited people entitled to long-term incapacity benefit, as my noble friend clearly explained.
	Amendment No. 118 would mean that people would accrue a year's worth of S2P where they had been entitled to long-term incapacity benefit for as little as half a year, whereas under our proposals people must have been entitled for a whole year.
	Amendment No. 120 would remove the 10 per cent work test qualifying condition whereby disabled people with broken work records must have worked and paid class 1 contributions for at least one-tenth of their working lives since 1978 to qualify for S2P.
	Finally, Amendment No. 121 is again about the 10 per cent work test and would mean that years of working and paying class 2 contributions would count towards the 10 per cent requirement, thereby bringing certain self-employed people into additional pension provision.
	Disabled people with broken work records are one of our most disadvantaged groups in the labour market. Under SERPS, every single year out of the labour market meant a smaller pension on retirement. Many disabled people who had worked for significant periods of their lives ended up with little or no additional pension because of their periodic absence from the labour market. I do not think that that was fair.
	Under our proposals, long-term disabled people who are out of the labour market for periods of time will be protected. If they are on low wages when working, they will receive the extra help that we are directing at the low paid as well. I will give an example. Take a disabled man in employment throughout his working life, earning £9,500, apart from 10 years when he was unable to work: if he had retired in 2025 under SERPS, he would have received a total state pension of £64 a week in today's earning terms. Under S2P, he will receive £81, which is £17 a week more. That represents a real improvement for disabled people that is long overdue.
	I turn to specific amendments. Clearly, disabled people who are out of work for long periods lose out most heavily under SERPS. That is why we are seeking extra help for those with long-term incapacity benefit, as they have the least opportunity to build up decent second pensions. Short-term incapacity benefit, to which this amendment applies, as the name suggests, covers short spells of illness and incapacity which are less likely to be disruptive to pension build-up.
	Of course, there are some people who experience short but frequent spells of incapacity. They may have a fluctuating illness and may have a mental health illness and are therefore in and out of work. The linking rules in incapacity benefit mean that people in this position will eventually move on to long-term incapacity benefit. The spells of entitlement to short-term incapacity benefit can be added up until they reach 52 weeks, at which time long term IB becomes payable. Thereafter, a full year out of work will qualify for S2P.
	Amendment No. 117 will bring people whose short-term periods of incapacity did not add up, in aggregate, to long periods out of work into S2P. I do not think that is appropriate because two-thirds of all IB claims which terminate are short term or, to put it another way, only two-thirds of those people who are on short-term IB do not go on to long-term IB. In other words, it is a natural break and there is a lot of "churning" at that point.
	Amendment No. 118 raises the question of the need for a whole year's entitlement to long-term incapacity as a gateway to S2P. The principle underlying S2P is to look at someone's position over a complete tax year. SERPS operates on the same principle. I do not think that there is a compelling case for altering the whole-year principle, particularly since long-term IB is normally paid for long periods covering several years. Long-term IB is not a benefit which people move on to and off and on to and off. They do on short-term IB, but not once on IB long term.
	There will be a question mark against the equity of introducing part-year rules for disabled people but not for carers, an issue to which we will return probably on the next amendment.
	The remaining amendments, Amendments Nos. 120 and 121, relate to the 10 per cent work test. I will set out the principle. S2P will continue to be a contributory benefit. It is not aimed at permanently disabled people who have no contact with the labour market. They are covered by the non- contributory parts of the benefits system, both before and after retirement age.
	One of our key aims is to ensure that disabled people with broken work records can still build good second pensions, saving where they can afford to do so, and receiving extra state support where they cannot. This means maintaining a link between work and entitlement to additional pension. The test in question is designed to prove some work attachment. It is a fairly modest requirement; 10 per cent is equivalent to two years of working life at the outset of S2P, gradually increasing to a maximum of five years after 2024. We think that is about the right balance between encouraging work and saving, on the one hand, while at the same time protecting disabled people who cannot work for periods during their lives.
	Amendment No. 120 would remove the test altogether, which I do not think would be right, for the reasons that I have explained.
	Amendment No. 121 would enable periods of self-employment to count towards the 10 per cent work requirement. This brings in the wider question of pensions for the self-employed. We recognise that the nature of self-employment is changing. We recognise that there are real questions about which we have consulted as to how best to encourage the self-employed to save for their retirement. For example, there are questions about the provision and how compulsory it should be. The issue of whether they were brought into S2P was indeed part of our consultation exercise and we are still considering that. I think that there are arguments fairly finely balanced as to whether one should compel self-employed people--whose businesses they may regard as their pension--to be required instead to pay into a pension direct, with the problems that might produce for their cash flow. We do believe that as a result it would be premature to accept an amendment on the question of S2P and the self-employed at the moment. I am sure that we shall return to it in due course.
	In conclusion, our proposals on the state second pension will do a great deal for disabled people with broken work records. Indeed, it brings them into additional pension provision for the first time. Of course we could go further, but I think that we have it about right. People will receive it if they are on long-term IB; they will receive it if they are in work--over £67 a week throughout the whole of the year; they will receive it if they have fluctuating conditions that have been covered by the linking rules. Given all that, the only year when someone would normally lose that benefit entitlement is the year one moves off short-term into long-term incapacity benefit. I think that we have it about right. I hope that, as a result, the Committee will not wish to pursue these amendments.

Baroness Turner of Camden: I thank the Minister for this very comprehensive explanation of the Government's policy. Of course, she has again referred to new SERPS rather than old SERPS, SERPS as it originally was. But I will let that go. The Minister knows that I supported old SERPS and was not very happy about what happened to it.
	However, everybody would want to encourage disabled people to take up employment wherever they can. The problem is, as everybody knows, that it is not easy for many. It was because of that that it was felt necessary to look again at the provisions in the Bill in relation to disabled people. I am not at all certain that I entirely accept everything that my noble friend has said, but certainly she said a lot and very fast. I will look at it in detail in Hansard. If I think that I ought to return on the issue of disablement and rights for disabled people, I will do so, but in the meantime I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No.118 not moved.]

Lord Goodhart: moved Amendment No 119:
	Page 27, line 39, at end insert--
	("(e) the pensioner--
	(i) did not have an earnings factor for the year equal to one greater than the qualifying earnings factor for the year; but
	(ii) would have had such an earnings factor if he had earnings equal to the lower earnings limit in each week in which paragraph (b), (c) or (d) would have applied to him if the words "throughout the year" had been omitted.").

Lord Goodhart: The amendment raises an issue on the same subject as the last group of amendments, but in a somewhat different form and it is concerned with a different problem.
	Under the new Section 44A of the Social Security (Contributions and Benefits) Act 1992 which is inserted by Clause 30 of this Bill, that section does two things. First, it effectively treats anyone with earnings below the lower earnings threshold, which is £9,500, but at or above the level that qualifies for contributory benefits, as having earnings equal to the lower earnings threshold. Secondly, it treats some people as having been credited with earnings that they did not actually have. Clause 44A(2)(a) deals with the former issue. Subsection (2)(b), (c) and (d) deal with the second aim--that is, the crediting.
	People can apply for crediting for the state second pension if the invalid care allowance or incapacity benefit is payable or if they have home responsibilities of certain kinds which preclude them working. But in each case, that condition must be satisfied throughout the whole of the year. That may well disqualify a pensioner in respect of the year of entry and exit; that is, the year during which invalid care allowance or other benefits were first payable and the year in which they cease to be payable.
	It is possible that in the year of entry or exit, someone may qualify under paragraph (a) because he has had an actual earnings factor above the qualifying earnings factor; in other words, because his earnings have been sufficient to qualify him for a pension in that year. But he is less likely to qualify under paragraph (a) if he gives up the job and transfers to, let us say, invalid care allowance or home responsibilities early in the year or if he is lower paid and, therefore, takes a longer time to reach the qualifying earnings factor. For pension rights to depend on the time of year at which the status changes from earnings to credited earnings creates wholly random anomalies.
	Secondly, for pension rights to be more difficult to obtain for the poor than for those with higher earnings is plainly unjust. The purpose of this amendment is to avoid the anomaly. It allows pensioners to claim an earnings factor for the entry or exit year by combining actual earnings under paragraph (a) for the period in work with notional weekly earnings for the period when they are entitled to invalid care allowance, incapacity benefit or have home responsibilities. Those notional weekly earnings are treated as equal to the lower earnings limit.
	The potential exclusion of entry and exit years is plainly unfair. An answer along the lines of this amendment seems simple and would exclude most, although not all, of the unfairness. It may well be that the wording could be improved but the principle seems to me to be obviously correct. I beg to move.

Baroness Pitkeathley: I am happy to support this amendment to which I have added my name. That is because the contribution condition requiring receipt of invalid care allowance during the whole of a year causes problems for carers.
	It causes problems for two groups of carers in particular: first, those who have lost ICA because the person being cared for has had one or more periods in hospital or in respite care, which in total amount to more than 28 days in six months. The second group comprises those who have lost ICA because they have earned more than £50 occasionally but whose earnings over the year do not reach the lower earnings limit for national insurance contributions.
	On Second Reading, I gave your Lordships some examples from my personal experience and that of the Carers National Association.
	I am absolutely certain that it is not the Government's intention to penalise carers either for taking advantage of a respite care break or for attempting to combine paid work with caring. On the contrary, I know that the Government's aim is the opposite of that. Evidence of that is given to us in the National Strategy for Carers which is working successfully. But penalising carers is what happens, however inadvertently, because of that throughout-the-year rule. Therefore, I urge the Minister to think again about this and to think about some small changes which may be made which would be of great benefit to carers.

Baroness Hollis of Heigham: Amendment No. 119 would allow people with an earnings factor below the qualifying earnings factor for the year to benefit from the low earner's boost in state second pension where they were entitled to invalid care allowance, home responsibilities protection, or long-term IB for part of a year. The amendment does not cover those receiving severe disablement allowance, but I suspect that that may be an oversight which the noble Lord would rectify were he to revisit this matter.
	Our proposals for a state second pension will give carers and long-term disabled people the opportunity to build up entitlement to a second pension for the first time. From the outset, some 2 million carers, including those caring for young children, and a similar number of disabled people, will begin to build up entitlement to the state second pension. Each qualifying year will be worth approximately £1 a week in additional pension in today's terms. There will be no limit to the number of years of caring which can count towards state second pension entitlement. Since the state second pension, like SERPS, is a contributory benefit, there will be a simple work attachment test for disabled people at the point of retirement.
	Entitlement to the state second pension will be calculated on an annual basis on a person's surplus earnings, as is the case for SERPS. That is the amount by which someone's earnings exceed the annual lower earnings limit. That means that we need to look at someone's earnings over the whole of the tax year in question. That is consistent with the annual returns made by employers on each employee's earnings in the preceding year. For example, someone who has earnings between the annual lower earnings limit and the low earnings threshold for the year in question will benefit from the low earner's boost. Someone who has been entitled to invalid care allowance or long-term incapacity benefit throughout the year will be credited into the state second pension. We believe that in the interests of consistency, fairness and operational manageability, this is the right approach.
	There are also some practical difficulties associated with the amendment. For example, HRP is not available for part years of caring activity. It would be quite difficult for employers or the department to move to a system which calculated entitlement on a weekly basis. That is why we believe that it is necessary to meet the qualifying criteria for the whole year.
	It may be that this amendment confuses the two different ways of qualifying for the state second pension. It would allow someone who is entitled to ICA, HRP or long-term IB for part of a year to "top up" an earnings factor otherwise below the annual lower earnings limit, so that he could benefit from the low earner's boost. He would be mixing and matching the two qualifications which occur in the course of a year.
	I understand the thinking behind this amendment. For example, someone may have six months on ICA which will qualify him and six months in work above £67 which, if it were for the whole of the year, would have qualified him. I can understand the argument that such a person should not lose a full year's entitlement. Interesting and important points have been raised. It is a very difficult issue both in terms of the read-across to other situations, particularly that of HRP, and in its practical implementation, as I have suggested. There would need to be a follow through of such a calculation for anyone with credits for a part-year. There would be a need to look at contracted-out cases and HRP. Employers would have to be asked to keep weekly records.
	As the Minister handling the Bill in this House, I can say that we have already wrestled with that issue. There are very real difficulties in what the amendment seeks to achieve, even though I understand the thinking behind it, which is well intentioned. In order to give the Committee some assurance, I am willing to take the amendment away to see whether we can meet the issues raised. The amendment presents almost as many anomalies as it may solve at present. But that does not mean to say that we cannot look at it again. I am sure that the Committee will understand that I make no absolutely no commitment because if we could have found an easy solution to the problem, I like to think that we should have found it already. But I understand that the Committee may want us to reflect on what has been said this evening and, in that spirit, I suggest that the Committee allows me to do so.

Lord Goodhart: I am grateful to the Minister for what is at least a moderately encouraging reply. I accept that there may be technical problems and that the amendment which I drafted is not necessarily the best way forward. But there is a serious problem with entry and exit years. Let us take the obvious case of someone in receipt of invalid care allowance. Let us imagine that the person who is being cared for dies during, let us say, the month of February, so there is not a complete year; but the period between the date of death and 5th April is insufficient to enable the carer to get a job and build up an adequate earnings factor in that job.
	It seems to me that there needs to be some solution to that problem. I am greatly encouraged by the fact that the Minister has accepted that there is a problem. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 120 and 121 not moved.]
	[Amendment No. 122 had been withdrawn from the Marshalled List.]
	Clause 30 agreed to.
	Clause 31 agreed to.
	Schedule 4 [Additional pension]:

Lord Goodhart: moved Amendment No. 123:
	Page 102, line 9, at beginning insert ("Subject to paragraph 1A,").

Lord Goodhart: In moving Amendment No. 123 I shall speak also to Amendment No. 124. The purpose of these two amendments, particularly Amendment No. 124, is to accelerate the maturity of the state second pension. I believe I have already made clear that the S2P has a good deal to be said for it. However, one of the problems is that it will take a long time to deliver its benefits. Indeed, by 2047, which I think will be beyond the lifetime of any of us presently in this House, it will be quite generous.

The Earl of Mar and Kellie: I will be 98.

Lord Goodhart: I am not sure that my remark applies to everybody. Perhaps one or two of us may still be around.

Baroness Hollis of Heigham: Perhaps I may ask the noble Lord why he looked behind him instead of across the Chamber!

Lord Goodhart: I was not sure who was behind me. By the year 2025, the poorest 20 per cent of pensioners will still be only £1.30 per week better off, according to a Written Answer given by the Government to my honourable--not yet right honourable--friend in another place, Steve Webb.
	All existing earners who are not contracted out have a SERPS entitlement. As pointed out by the noble Baroness, the S2P will be more generous than SERPS to lower earners. The amendment will enable lower earners to claim a full S2P in a shorter time by substituting a year of S2P for a year of SERPS. The amount of the S2P is calculated under Schedule 4 to the Bill which inserts a new Schedule 4A into the 1992 Act in its usual confusing way, which makes it almost impossible for anyone to understand what is going on in the Bill. That starts on page 102.
	The idea behind the amendment is that if, in any year after the S2P has been introduced (let us call that "Year X") the amount of the S2P earned in that year is larger than the amount of SERPS earned in any given year before the S2P is introduced (let us call that earlier year, "Year A") the contributor can give up his right to SERPS in respect of Year A and claim the S2P twice over in respect of Year X. The following year, Year Y, the contributor can do it again in respect of another SERPS year. The process can continue until the contributor reaches pensionable age or has used up and exchanged all the SERPS years which are worth exchanging. In some cases that means that the contributor could qualify for the full S2P in as little as 20 years.
	I recognise fully that that is a complex idea. It emerges from the fertile brain of Professor Webb. It will need detailed information to be given to contributors. I am not sure that I have the formula quite right. Indeed, I believe that if one doubles the amount in any year under paragraph 1(1)(a), one also has to increase the number of relevant years by one, which I failed to do. If the Government can think of a simpler way to speed up access to S2P, I would, indeed, be glad to hear it.
	However, I believe that much trouble arises from treating pay-as-you-go schemes as if they were funded. Under a funded scheme, it is obvious that you cannot pay a full benefit until the fund has fully built up. However, if you are making a pay-as-you-go scheme more generous, you can apply more generous treatment to past as well as future years.
	The S2P will increase public spending. I understand why the Government do not want to bring in the full increase next year or in five years' time. The amendment does not do that. However, there is no need to delay the phasing in of the full increases over a period as long as 45 years. I believe that the Government should accept, if not this particular draft, at least the principle behind the amendment or come up with a better scheme for phasing in the full S2P more quickly than they propose now. Otherwise, the S2P will prove to be an extreme disappointment to any but the youngest of those presently in the employment market. I beg to move.

Baroness Greengross: I have one or two points to add on the state second pension in so far as it will affect the income of tomorrow's pensioners. I welcome the fact that low income groups will be credited into this pension, especially carers, many of whom will be working-age people caring for elderly parents.
	However, perhaps I may ask the Minister whether it will be enough to give a decent income on retirement. As I pointed out at Second Reading, the S2P is expected to provide a maximum of around £50 per week in relation to today's earnings. The often-quoted example provided by the Government of a woman reaching 65 in the year 2051 who had spent her life earning under £9,500 or caring for young children was that she could expect to receive £84 per week income from the basic pension and her S2P together in relation to today's earnings, which is about £6 more than the level of today's income support. That is better than the current system. However, is it really adequate or something on which we should encourage such people to rely?
	Currently, about one in five older people receive income support, the MIG. I was disturbed to learn that without any changes to the state pensions, one in three older people will be on means-tested support by 2050. As an aside, some older people, no doubt, will become eligible for MIG because they have lost half their husband's SERPS entitlement on his death; an issue we will discuss presently.
	Part of the reason for the rise is the fact that the Government promised to increase the MIG by earnings which will make more and more older people eligible for it every year. However, even after the introduction of the S2P, one in four older people are forecast to be on means-tested benefits by 2050. Having checked with the DSS, I discovered that it is only when one assumes that people save an additional 5 per cent per year that we end up with the same proportion of older people on means-tested benefits in the year 2050 as now, one in five. Given that the savings ratio has fallen so much, is that realistic?
	I find myself attracted to amendments such as these which seek to improve and enhance the S2P to ensure that it provides a decent income in retirement for tomorrow's pensioners, especially the low paid, the carers and those who are disabled.

Lord Higgins: Perhaps I may intervene briefly. I was trying hard to remember the quotation:
	"O, what a tangled web we weave,
	when first we practise to deceive!"
	with reference to the honourable Member in the other place.
	We await with interest the reply from the Minister. However, our concern is very much what has been said a moment or two ago. The system being introduced will not produce benefits for another 25 years or so. In particular, it is not a funded scheme. What we have here is the perpetuation of a situation whereby one generation pays for the retirement benefits of the previous generation. In effect, we should have a funded scheme. With such a scheme, the people in this generation would pay for their own benefits in due course.

Baroness Hollis of Heigham: Perhaps I may ask the noble Lord for elucidation on that point. He is the first person this evening to make that point. Is he arguing that people with an income of less than £9,500 should be paying into a funded scheme? If so, how could they afford to do so? If not, where would the money come from? If it were to come from the taxpayers, would it not be the case that the taxpayers on low earnings would be paying twice over, both for future generations and to go into a funded scheme of their own? I do not see how his sums even begin to add up.

Lord Higgins: I shall be taken a long way from the amendment in my response, but perhaps I may put briefly what seem to me to be the substantive issues here. The noble Baroness is saying in effect that certain people will be deemed to have made contributions, but that still remains simply a paper promise. In no sense is it backed up by real money. If one is to avoid a situation of continuing generational equity, we will find that we shall continue to deliver only paper promises.
	For the reasons which I put to the Committee on an earlier amendment, the more that we can move towards a funded scheme--if the Government really are saying that they will deem these to be contributions--where the contributions are real rather than only notional contributions, the better. There is a danger that, although at this point the Government say that they will "deem" contributions to have been made, when it comes to the benefits covered by those "deemed" contributions to be made, we may well find that at that point there is no additional cost to the Government because the minimum income guarantee will have overtaken the second state pension.

Baroness Hollis of Heigham: I am puzzled by the remarks of the noble Lord. Perhaps he could help me on this point. If he says that for those earning £9,500 we should move from a pay-as-you-go scheme to a funded scheme, how will he respond to the argument that that generation would then have to pay twice over, both for the pay-as-you-go scheme for older pensioners as well as the funded commitments for themselves? I do not see how this method will avoid the problem of double payments, in this case payments to be made by some of the poorest people in work in the country.

Lord Higgins: It would depend on what was done about debts. It is possible for the Government to incur debts and to project for them. However, I believe that I am moving far too wide of the amendment. Perhaps I may return to this matter on another occasion. Indeed, it may be more appropriate to address it when we come to the Government Resources and Accounts Bill rather than in the present context.

Baroness Hollis of Heigham: I think that is a very good idea.
	Noble Lords have put forward these amendments which would boost some people's entitlement to the state second pension during the period when it is building up to maturity. They would provide an element of retrospective entitlement to S2P for certain people for years prior to its introduction, based on years of entitlement after its implementation, in order that individuals could build up greater amounts of additional pension.
	Under the amendments, for each year of entitlement to state second pension, someone could choose to gain retrospective entitlement to state second pension for a previous year under SERPS. This would be achieved by allowing people who have accumulated entitlement to additional pension under both schemes to trade one for the other; effectively, to choose the better buy by giving up a year's entitlement to SERPS in return for doubling the value of a year of their state second pension entitlement. I hope that I have understood the detail here.
	Furthermore, in order to ensure that as many people as possible would benefit from this proposal, Amendment No. 124 also requires that anyone to whom it would apply should be identified and notified of how they could maximise their additional pension entitlement in this way; namely, by trading in low-earning SERPS years and replacing them with the low earners' boost, still related to low earnings but now related to the higher earning S2P years.
	I shall not revisit the reasoning behind what we are trying to do with S2P except to remind the Committee that under SERPS it is possible for someone to pay contributions on earnings just above the lower earnings limit for the whole of their working lives yet still retire on a state pension which is below the level of the minimum income guarantee. This will not happen when the state second pension has built up. From 2038, anyone retiring with a full working life of employment behind them, or periods of caring or disability, will receive a total of basic pension and additional pension above the MIG.
	When the noble Baroness, Lady Greengross, said that she was dismayed to learn that under these proposals one in three would still be required to fall back on the MIG, perhaps I may tell her that that was a misguided assertion made by the noble Lord, Lord Higgins. The fact is that without the scheme in place it will be one in three; under the scheme it will be one in five. In part that is because of the greater generosity of the MIG at ages 75 or 80. Without that, even fewer people would fall back onto the MIG at those ages.
	The state second pension will focus help on 4.5 million low earners and 2 million carers. Under our proposals, people will remain above the MIG for a considerable time. Someone who had earned as little as £3,500 throughout their working life will retire on a combined pension of £85 a week and they will stay clear of the MIG for nine years. Couples will do even better. A couple where both had lifetime earnings of £3,500 a year would receive a large enough pension to keep them both above the MIG for 21 years, which I believe is good news.
	I acknowledge that the benefits in S2P take time to build up. Inevitably, that is a part of the long-term nature of pension provision. However, many of the lower paid can expect to see a significant boost to their pensions within 20 years or so. I believe that that improvement may have been rather underestimated by noble Lords when they made their contributions to these amendments.
	For example, someone retiring in 2025 with earnings of just £6,500 for a full working life would get £76 per week under S2P; £18 a week more than they would have got under SERPS. Or to take a couple retiring in 2025--he earning £180 and she earning £120 a week but also caring for children for 20 years, 10 of which with carer's allowance--under SERPS they would receive £5 more than the MIG; under S2P they will have £35 more. That shows just how significant and generous is the increase in terms of accrual rates and the low earnings boost that will come with S2P over SERPS. Perhaps I may give the Committee a third example. A woman retiring in 2051 would get £85 in today's earnings terms--£10 above the MIG levels in 2051.
	I have tried to give examples to show that, although by definition this is a state second pension for those on lower earnings and therefore that pension is not as generous as many of us would wish if resources were unlimited, in comparison with having in place no state second pension, or in comparison with SERPS or the drop down onto income-related benefits, the long-term position of those who are poorer will be infinitely better than is currently the case.
	We inherited a situation where a wide range of people--low earners, carers and the disabled--had no hope of a decent income in retirement. We are ensuring that we shall deliver help to those groups.
	Under Amendments Nos. 123 and 124, for each year of entitlement to state second pension, someone could choose to gain retrospective entitlement to state second pension for a previous year under SERPS. That would represent a more generous increase for some, but it would do little to help those working as carers and the long-term disabled. Furthermore, it would be unfair to existing pensioners, who would not be able to benefit. Of those who would gain, people retiring in the short term would be helped least because they would have the smallest number of years entitlement under S2P to be increased.
	Leaving aside arguments about unfairness, the additional complexity of the amendment would be huge, both for the department and for the individual. The Benefits Agency would be required to identify and notify anyone who might benefit from this measure and then explain how such a person might use it to maximise their entitlement to additional pension. The individual would then have to decide whether they wished to take advantage of the option and, if so, which years of SERPS they should give up and, conversely, which years of state second pension they should seek to increase, looking backwards over an earnings history of perhaps 40 years. Those with years of moderate earnings under S2P would benefit the most, because they would have years of increased state second pension entitlement to swap for years of low SERPS entitlement, whereas those with a lifetime of low earnings would gain proportionately less.
	The element of pick-and-mix, which would depend on records that may not be kept adequately, along with the potential for giving people the wrong information or mis-selling, seem to me to be mind-bogglingly complex. I believe that our previous decision was right. Not only is retrospective cover for certain groups unfair to others; it does not provide the help necessary for those who form our priority groups. Furthermore, the operational difficulties, disproportionate costs and dependence on records which may be 20, 30 or 40 years out of date or which may have disappeared would mean that the proposal is simply not viable.
	For those reasons, we have chosen to direct resources to the most vulnerable through the MIG as well as other measures that we have already discussed. In the light of that response, I hope that the noble Lord, Lord Goodhart, will feel able to withdraw his amendment.

Lord Goodhart: My Lords, I recognise that this is an amendment of considerable complexity and that the noble Baroness's argument has some force. Nevertheless, this is undoubtedly a serious problem. The delay before the state second pension becomes fully operative will be a matter of concern and, indeed, threatens its future--one knows how short the life of the average pension arrangement is and we have seen the number of changes that have already taken place.
	There is a problem in this area. The noble Baroness has shown that in a few cases there will be substantial benefits, even by 2025; nevertheless she has not attempted to dispute that, overall, the average benefit to the lowest 20 per cent of earners will be only around £1.30 in real terms. That arises because this is an average and the specific example, for instance, of somebody earning £6,500 a year depends on somebody earning that sort of figure every year over a lifetime of earnings. As we know, average earnings vary greatly.

Baroness Hollis of Heigham: If the noble Lord will give way, this is a point I should have picked up and I apologise to the Committee for not doing so. The figure of £1.30 is the difference between the income of the bottom quartiles of pensioners in 2025 with or without the introduction of the state second pension. But this is across all pensioners--we accept that it is an average--including the poorest, oldest pensioners who retired before or shortly after the reduction of S2P and therefore have no benefit from it at all.
	I have tried to argue for those who have any period in S2P by building up entitlement. They quite quickly will see an increase. But it is not reasonable to ask the Committee to talk about £1.30 which includes people who have already retired and therefore would never come within the S2P proposals.

Lord Goodhart: If we are talking about the year 2025, of course by that time the number of pensioners who will have retired before the introduction of the state second pension, which is proposed in 2002, will be much reduced. So the figure of £1.30 may have to be increased somewhat if one is looking at the lowest 20 per cent of those who retired after 2002. But I doubt if it will be all that much larger.
	We will take this amendment away; look at it, and consider whether or not we need to bring it back, either as it stands now or possibly in some more simplified form. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 124 not moved.]

Baroness Amos: I beg to move that the House be now resumed. In moving this Motion I suggest that the Committee stage of this Bill begin again not before 8.42 p.m.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.

NHS Infection Control

Baroness Masham of Ilton: rose to ask Her Majesty's Government what action they are taking to ensure that the Government guidelines on infection control in hospitals are being implemented by National Health Service trusts.
	My Lords, in asking this Question tonight I bring to your Lordships a subject which is of immense importance, even though the debate is restricted to one hour. I am delighted that the noble Lord, Lord Turnberg, is making his maiden speech. Welcome.
	I thank all those who are speaking this evening, which illustrates their enthusiasm and dedication in trying to help improve the current situation which is causing concern to many people throughout the country who may have to go into hospital for an operation or treatment, especially those patients who are vulnerable.
	The House of Lords Select Committee report on Resistance to Antibiotics and other Antimicrobial Agents, identified the growing concern about the rise of MRSA (methicillin resistant staphylococcus aureus) and other hospital infections. It concluded that MRSA poses one of the biggest challenges to infection control and that in many hospitals it is now endemic. This is a world-wide problem. I had the privilege to be one of the Members of your Lordships' House who sat on that committee.
	On 17th February 2000 the National Audit Office reported on the management and control of hospital-acquired infections in acute NHS trusts in England. It says that they are becoming harder to treat and hospital-acquired infection may be costing the NHS as much as £1 billion each year. In many NHS trusts, infection control may not have the profile it merits and the relationship between health authorities and NHS trusts concerning infection control is not covered as well as it should be.
	The Department of Health's 1995 guidance places responsibility for ensuring the provision of effective infection control arrangements on the hospital chief executive. It was also reinforced in the Government's response to our report. To obtain an overview of chief executives' direct involvement in infection control in NHS trusts, the National Audit Office analysed the responses to seven questions in its survey. Those questions, which were designed to test the chief executive's compliance with the department's guidance, were scored on a simple yes/no basis. Sixteen National Health Service trusts scored zero; while 87 (41 per cent) scored yes on four or more questions, only one scored yes on all seven questions. It suggests that chief executives of most trusts are not as directly involved as the guidance suggests they should be. Fifty-eight per cent of chief executives never receive an annual or more regular report on the amount spent on hospital-acquired infections.
	The main factors contributing to the direct costs of treating hospital-acquired infections are increased length of stay and additional antibiotic therapy and, where necessary, the need for repeat surgery. Those costs require surveillance and with some infections wards have to be closed. Driving back from York two weeks ago I heard on the local radio that three wards had closed at the York Hospital Trust due to sickness and diarrhoea. Absence from work by staff colonised with MRSA also caused extra expenses.
	Hospital infections cause waiting lists to lengthen. I have some questions for the Minister. Many people are very concerned about the cleanliness in hospitals. Why cannot the ward managers, the sisters or charge nurses be in charge of all domestics, even though they are contracted out? Have we got adequate hospital accommodation for patients with infections, including drug-resistant tuberculosis? Are wards designed correctly with enough basins and side wards? Is food poisoning increasing? Is the training of all medical and ancillary staff adequate when dealing with infections and the control of them within the hospitals and the community, including agency staff who move from place to place? Do staff always have enough changes of uniform and gowns when moving around hospitals? Are the changing and washing facilities adequate. The basic need to wash hands has been well publicised. But germs can hide under rings, so great thoroughness is needed.
	Health regions have become very remote. There is no doubt that in some hospital trusts there is complacency towards infection control and interest in protecting resistance to antibiotics by careful prescribing. The Government sent out guidelines. They have done a great deal to raise infection control up the health agenda. But they need to do more. Drug resistance is a frightening prospect. Difficult viruses, pathogens, prions and numerous infections have already claimed the lives of many people. With modern travel, the world is small. We must be vigilant. This is an extremely complex and difficult matter. It needs a dedicated general to lead the troops into combat against an army of very clever microbes.
	The statement of the National Audit Office that 5,000 die annually from infections was queried by the Minister, as the noble Lord said that the figure was extrapolated from statistics in the United States. But this surely shows that we need far more information and surveillance; indeed, the figure may be higher. The Government have said:
	"Infection control is a priority for the NHS and is a 'must do'",
	in the Modernising Health and Social Services National Priorities Guidance 2000/01-2002/03. It was suggested to the Chief Executive of the National Health Service that the NHS does not monitor compliance with the guidance that it issues. He replied that enforcement was a matter for the Health and Safety Executive. Could this be passing the buck?
	I suggest, to help the Government achieve their aim, that they should appoint a "Tsar of Infection Control", who would be similar to the Inspector of Prisons who is wholly independent. He would be a supremo over infections acquired in hospitals and the community and someone who could visit any place at any time.
	I was interested to see on the Channel 4 news programme last Thursday a film about cleaning a ward at St. Thomas' Hospital, because of the manifestation of MRSA. Florence Nightingale may be looking down on your Lordships tonight. I think that she would say, "If you don't keep up high standards of care, hygiene and discipline on the wards and feed the patients with good nourishing food, the infections will take over and win the day".
	If the Government will ensure that the correct resources are spent on those provisions, it will be an investment for the future and will save much unnecessary suffering to patients and their families. This is a matter that needs addressing urgently. I look forward to listening to the debate and the Minister's reply.

Baroness Young: My Lords, we are all grateful to the noble Baroness, Lady Masham, for tabling this Question tonight. We look forward to hearing the maiden speech of the noble Lord, Lord Turnberg.
	This Question raises a very important issue. I am sure that the Minister will recall that I tabled a Question on this very matter quite recently, based on the report of the National Audit Office. I quoted then the figure mentioned in press reports of 5,000 people who die annually as a result of infections picked up while in hospital. Although I entirely accept that the Minister questioned that figure, he did accept that the number of infections caught while in hospital was unacceptably high. It would be helpful if the noble Lord could tell us what the correct figure is this evening. The report also said that, at any one time, 9 per cent of hospital patients are in hospital because of the infections that they have contracted while in hospital. As the noble Baroness, Lady Masham, said, the cost to the NHS is enormous; indeed, perhaps as much as £1 billion annually.
	It is a very sad fact today that it is not at all unusual to hear people saying that they are quite worried about going into hospital because they are afraid of contracting an infection during their stay. To the most casual observer, hospitals can look very dirty, especially, I am told, bathrooms and lavatories. Quite frequently, the most elementary practices of hygiene are not applied. I am sorry to say that the memorandum that I received from the Royal College of Nursing has not really encouraged me. I know that there are thousands of excellent nurses in the NHS who do a truly professional job. However, what is so frequently needed is not the very highly skilled nurse with technical qualifications, but simply that old quality of tender, loving care; that is, thinking about what the patient actually requires. That applies especially to elderly patients. There is no doubt that some are left to attempt to feed themselves and are unable to do so. One patient known to me actually died of starvation in a national health hospital.
	The Royal College of Nursing memorandum talks about the "whole system" approach so that patients' needs are assessed on arrival and monitored during their stay in hospital; and says that stringent hygiene controls should be applied to staff. So far so good, as I am sure we would all agree. But who will see that all this is carried out? So much of the trouble seems to come from a lack of supervision and no one really being in charge. Who is actually responsible for the patient, for hygiene or for cleanliness?
	Someone in hospital said to me, "Well, the trouble is that the cleaning has been contracted out". But that is simply not good enough. Whoever the company is, standards ought to be enforced; otherwise, the company should be changed. It is no use pretending that one can pass the buck to someone else. It seems to me that there should be a number of basic rules in hospital, many of which are quite simple and straightforward and could be put into practice immediately.
	Many people believe that visiting hours should be looked into. Some patients have visitors all day long and they may bring in infections. I am not an expert, but, if that is the case, should it not be investigated? There should also be proper supervision of the cleaning. In that way, when someone inspects the ward every day, it will be seen to be clean; and that applies also to patients. Dirty cups and saucers should not be ignored; they should be removed. Such practices would be totally unacceptable in one's own home. Moreover, nurses should tie back their hair and wear a clean uniform each day. I understand that some nurses do not wear uniforms. Whatever the standards imposed, they should not be less good that those which would operate in a food factory where standards of cleanliness and hygiene are very high. Surely that is the very least that we can require of the National Health Service.

Lord Turnberg: My Lords, I am grateful for the opportunity that this debate provides for me to give my first, rather hesitant, speech. I should like to begin by expressing my deepest thanks for all the support and friendship shown to me by officials, Doorkeepers and noble Lords during this first, I have to admit, rather confusing week.
	Tonight's debate is on a subject in which I have a keen interest. I should explain straightaway that my interest derives from a career as a hospital consultant physician and then as the president of a medical Royal College; but, more pertinently, because I am currently chairman of the board of the Public Health Laboratory Service (the PHLS). This is an organisation whose principal concern is to protect the public from infectious disease, including that acquired in hospital.
	Noble Lords will understand why hospital-acquired infection is rearing its ugly head so dramatically of late. The rapid turnover of patients who are more sick and more vulnerable and who receive treatments which suppress their immune mechanisms and which may be given invasively by intravenous drips all increase the risk of infection. The use of antibiotics, although both necessary and widespread, increases the emergence of resistant organisms. All this has led to a situation in which almost 10 per cent of patients in hospital become infected at one time or another. This amounts to some 100,000 patients per annum.
	There is relatively little that one can do about the fact that patients are very sick and need intensive treatment. After all, that is what hospitals are for. But there are other reasons for hospital-acquired infections that are much more amenable to prevention. As both noble Baronesses said, top of the list is the environment on the ward. It is quite clear that where dust collects, so infection is harboured. Good evidence exists that removing dust works.
	In one hospital I know, an outbreak of methicillin resistant staphylococcus aureus (MRSA) was aborted by an intensive cleaning programme, only for it to recur when the cleaning contract lapsed. A germ was found by the PHLS in the dust on the ward on both occasions--a nice but unfortunate demonstration of the impact of good versus poor cleaning practice.
	We have known about the effects of washing hands between seeing patients since the time of Semmelweiss in the 1850s. His findings were neglected in his time, but we have no excuse now. The NHS action plan published last year was a move in the right direction on hand washing. We know that simple measures such as those--this is not rocket science--can reduce infection by as much as 30 per cent.
	The last point I wish to make in the small amount of time that is allocated to me concerns the importance of constant monitoring and surveillance in hospitals. If we do not monitor and survey what infections exist and how often they occur, how can we hope to manage them? This surveillance is carried out at two levels: at the hospital trust level, where local infection control teams operate; and at national level, where the Public Health Laboratory Service operates by collating data from hospitals across England and Wales so that each hospital can compare itself with others.
	Noble Lords may not be surprised to hear me say that more could, and should, be done at both levels given sufficient encouragement and--dare I say it in a non-controversial speech--more resources. That point was emphasised in the National Audit Office report published earlier this year, as the noble Baroness, Lady Masham, mentioned.
	I finish by saying that I appreciate the opportunity to speak in this important debate. I know that my noble friend Lord Hunt and the Government take the matter extremely seriously.

Lord Patel: My Lords, it is a great pleasure on behalf of the whole House to congratulate my noble friend and colleague of many years, the noble Lord, Lord Turnberg, on his maiden speech. He speaks with both ability and knowledge. As someone who lists talking as one of his interests in Who's Who, he should quickly feel at home in this House! I join others in thanking the noble Baroness, Lady Masham of Ilton, for initiating this debate. The subject is important and has serious implications for the NHS.
	Resources put into improving care of patients with cancers and heart disease will not produce the desired outcome if we cannot reduce the incidence of hospital-acquired infections. The noble Lord, Lord Turnberg, has already mentioned some of the statistics. Some 10 per cent of patients in hospital will acquire infection; 10 per cent of those infected will die of infection. Nearly 30 per cent of those infected may remain carriers. On average, the increase in hospital-acquired infection is 50 per cent every year, year on year. An acute hospital with 800 beds will at any given time have 80 patients infected with antibiotic resistant bacteria. These worrying figures may, if anything, be conservative.
	Of course the service requires more resources to combat the problem--I hope that they will be forthcoming--particularly to strengthen microbiology departments. What is required is a commitment at trust level and at primary care level to implement many of the simple policies to contain the problem: training of staff, particularly junior doctors, or for that matter senior doctors; and adherence to hand-washing protocols, as has already been mentioned by the noble Lord, Lord Turnberg. But even these simple measures can take up much time--two hours in a nurse's 12-hour shift. Intensity of work, both for nurses and junior doctors, adds to the problem.
	Other measures include meeting the standards of hospital cleanliness; reducing trafficking in hospital wards; the screening of risk patients; and adherence to hospital antibiotic policies, particularly making sure that the infection does not spread to other clean areas in the hospital. These measures in themselves will help to reduce the incidence and contain the problem.
	I believe that we need a national infection manual which defines roles and responsibilities of health authorities and trusts and healthcare professionals, with advice on infection control in primary care and the acute sector, prevention of infection in patients, including high risk and vulnerable groups, such as the immuno-suppressed, the elderly and patients with in-dwelling catheters and other devices. Such patients are increasing in numbers. Appropriate disposal of clinical waste etc. will help and should be produced. I notice that the National Audit Office also recommended this. It should also help authorities and trusts to establish surveillance policies. I hope that the Minister will comment on that.
	I also hope that the establishment of clinical governance and inspection and visits of hospitals by the Commission for Health Improvement and the Clinical Standards Board for Scotland--here I declare an interest--to make sure that there is compliance with protocols will bring about further improvement.
	Today I read in the local paper, the Dundee Courier, which is in the Library, a report of a family taking legal action following the death of a relative who died of MRSA following surgery. Increased litigation will follow and put further strains on scarce resources. The problem is serious and getting worse. It needs urgent attention. I hope that today's debate and recent reports will help to achieve that. I too look forward to hearing the Minister's response.

Lord Rea: My Lords, it is a great privilege to follow two professional colleagues who are former presidents of their colleges. I congratulate my noble friend Lord Turnberg on his maiden speech. Both noble Lords have been practical despite their former high office in their professions.
	The noble Baroness, Lady Masham, can be compared with a terrier; she will not drop a problem but shakes it until it is laid to rest! Like the noble Baroness, I was privileged to be a Member of your Lordships' Science and Technology Committee which looked into resistance to antibiotics in 1997 and 1998. An important chapter of its report deals with infection control in both hospitals and the community. We spoke to many witnesses from the Department of Health, the Public Health Laboratory Service and the Infection Control Nurses Association and to several experts in the United States, where the problem is equally bad, if not worse.
	In four minutes it is impossible to do justice to more than a fraction of the evidence we heard. Running through the British evidence was frequent reference to the Cooke report, to which the noble Baroness refers in her Question. A central part of its guidelines is the setting up of an infection control team (ICT) in every acute NHS hospital trust. This recommendation had to a large extent been implemented by the time we held our inquiry. Some of them, of course, had had these teams for many years before that. But not all the teams were functioning well. I quote from the evidence of the Infection Control Nurses Association:
	"The vast majority of ICTs in acute hospital trusts have no budgets whatsoever"--
	the service being funded as part of pathology services whose budgets were already overstretched--
	"There are standard infection control measures ... Unfortunately there is often a perception amongst senior clinical medical staff and trust managers that some of these measures are more disruptive than effective [this conception] arising as a result of increasing pressures on hospitals to admit and transfer patients rapidly, especially during the winter months".
	If I were to attempt to sum up the problem and its solution in four minutes, it seems clear that, although the science of how to avoid and contain these outbreaks is well understood, action on the ground, both in hospitals and in the community, lags far behind. Chief executives of trusts and some senior clinicians need more compelling continuous data to convince them that they should channel resources into the system laid down in the guidelines, which could cut distressing and expensive outbreaks.
	Both my noble friends referred to better surveillance systems which need to be established in hospitals and the community. Time does not allow me to expand on how that proposal should be implemented but the Public Health Laboratory Service was keen that that should be done. The Government have taken some steps to set up such systems.
	Buttressing such services financially would be a sensible use of part of the extra funding promised from the National Health Service. It would repay itself quickly. It may save money not only directly--in terms of reducing hospital stays--but indirectly, by reducing litigation and possible expensive compensation, which account for far too high a proportion of the NHS budget.

The Countess of Mar: My Lords, I am grateful to the noble Baroness, Lady Masham, for introducing this topic and although it had to be brief, I much enjoyed the penetrating speech by the noble Lord, Lord Turnberg.
	Previous speakers ably demonstrated hazards and deficiencies in the observance of hospital infection control. I shall approach the question from a different angle. Many infections are caused by cross-examination, which usually occurs as a result of shoddy practice at the most basic level. As a specialist cheesemaker, I would not be allowed even to begin producing food in premises where dust was clearly visible, the paintwork was dirty and peeling from the walls, washing facilities were filthy or a mouse watched me from a hole in the ceiling--all experiences I have had in hospitals in the past few years.
	Why are hospitals allowed to continue functioning under those circumstances? I acknowledge that my business activities must be regulated and that I must understand the need for hygiene to protect the most vulnerable of my prospective customers. Hospital in-patients are by definition vulnerable, yet they are afforded little statutory protection.
	We heard the figures for hospital-acquired infections. By contrast, each year fewer than 250 people in the entire population die from food poisoning from all sources--yet businesses can be closed and financial penalties imposed if the cause can be traced to failures by a food producer. Why is there is no public outcry about hospital conditions? Where is the accountability?
	Slaughterhouses have to be licensed and are inspected by vets; food premises have to be registered and are inspected by environmental health officers. There is no equivalent independent hygiene inspectorate for hospitals. Individually developed hospital hygiene rules are not backed by law.
	I ask the Minister to consider a statutory requirement that all hospital staff, including doctors, meet a required standard of understanding of basic hygiene principles and apply them; that practical infection control--I stress "practical", microbiology and general hygiene should be taught to nurses; that hospital-acquired infections should be formally defined; that all incidents and outbreaks should be notifiable, as are food poisoning cases; that there should be an independent inspectorate with statutory powers; and that an equivalent of HACCP should be developed for hospitals.
	Finally, I ask the Minister why EUSOL--the acronym for Edinburgh University solution of lime, with its wonderful antiviral as well as antibiotic properties--has been withdrawn. How many patients or nurses have been poisoned by it?

Lord Jenkin of Roding: My Lords, we are grateful to the noble Baroness for her Unstarred Question. In common with her and the noble Lord, Lord Rea, I served on the Select Committee which considered resistance to antibiotics two years ago. The noble Lord mentioned the evidence from the Infection Control Nurses Association, which was some of the most compelling we heard. The ICNA painted a picture of skilled and committed professionals battling against, at best, a lack of resources and, at worst, falling standards of hygiene--all against the background of an alarming rise in antibiotic resistance. Reading the report of the Comptroller and Auditor General, I am not clear that much, if anything, has changed.
	The ICNA made this pertinent remark, at paragraph 4.31 of our report:
	"It is difficult to justify the costs incurred from an intervention where the successful outcome measure is an event not occurring".
	That profound statement lies at the heart of the difficulty of getting sufficient resources for infection control. The National Audit Office repeated what must be true in the management of a trust, at paragraph 6:
	"It will be important for NHS trusts to justify existing and additional expenditure on infection control against other uses of health resources".
	One in four service agreements with authorities do not cover infection control services at all. Three in four do not require trusts to calculate infection rates. One in three trusts had neither the chief executive nor his representative on the hospital infection control committee. Nearly three out of five chief executives never see reports on the resources spent on hospital-acquired infections; fewer than half receive reports on rates or numbers of hospital-acquired infections.
	Contrary to departmental guidance, which requires that all chief executives should approve infection control programmes, the report indicates that only one in 10 do so. If the Audit Commission is right that trusts must justify expenditure on infection control, how can a trust board--I have been chairman of one for six years--"justify" expenditure if our top executive managers do not know what is going on?
	Although I have much sympathy with the noble Countess's argument for an external regulator, there is or should be in existence now sufficient management authority to make sure that the right things happen. The National Audit Office report makes it abundantly clear that they are not happening. Our Select Committee sounded a well-justified note of real alarm at the inexorable rise of drug-resistant bacteria. The report makes it depressingly clear that little has happened to implement our recommendations.

Lord Clement-Jones: My Lords, this has been an excellent debate. I was particularly delighted to hear the maiden contribution by the noble Lord, Lord Turnberg, who was effectively the man who saved Bart's--for which many of us will be grateful to him for a long time to come.
	I shall not attempt to sum up this debate in four minutes but will make a few points. The anniversary of Florence Nightingale's birthday always coincides with International Nurses Day, which took place last Friday. As my honourable friend Dr Jenny Tonge reminded the other place last week, by tackling dirt and disorder in hospitals during the Crimean war, Florence Nightingale became, and still is, a national heroine. One of my treasured family possessions is a diary entry of a meeting between my great-great-grandfather and Florence Nightingale in 1856 in the hospital in Scutari, arranged by his mother who was worried that he was not telling her how ill he really was.
	It is quite extraordinary that, a century and a half later, we are still arguing about the priority given to cleanliness and infection control in hospitals. Florence Nightingale's most quoted remark is,
	"It may seem a strange principle to enunciate as the very first requirement in a Hospital that it should do the sick no harm".
	We still have a long way to go before that is true of many of our hospitals.
	Your Lordships have clearly stated the conclusions of the Public Health Laboratory report published last December and of the National Audit Office report of February of this year. I do not propose to repeat them. But what have the Government done in response to those reports? On 5th April, the Secretary of State promulgated a code of cleanliness to be sent to all hospitals, placing part responsibility for its implementation on hospitals' own infection control teams. I welcome this, but what evidence is there that this code will be enforced any more than is the NHS action plan issued last March?
	Is not the key being absolutely clear about who is responsible for the implementation of guidelines? With no clear indication of where responsibility lies, no legal action is likely to be taken and standards will be allowed to slip further. In his evidence to the Health Select Committee, Sir Allan Langlands seemed to believe that the responsibility for enforcement was that of the Health and Safety Executive, not of the NHS Executive. Should it not be firmly with the latter? Should not the Commission for Health Improvement have a major role in this context?
	As the noble Lord, Lord Jenkin, said, who is responsible is even less clear at hospital level. In many instances, much of the responsibility for substandard levels of cleanliness in hospitals is placed on the cleaning and catering contractors, who are engaged at the lowest possible rates. Health managers argue that this has arisen from the imposition of so-called "efficiency savings" of 3 per cent year on year. It has clearly been a false economy. Cost savings from these contracts may be seriously outweighed by the additional financial burden generated by hospital-acquired infections.
	Should not those responsible for the wards and for patient management have direct responsibility for cleanliness, with the budget to match? A recent article in the Health Service Journal stated that the answer was managerial leadership to solve the problem. Let us give those at ward level the opportunity to do so.
	Furthermore, should we not be tracking the spread of infection and the quality of infection control much more carefully, as the noble Baroness, Lady Masham, advocated? Should not infections such as MRSA be made notifiable, as recommended in the report of the House of Lords Select Committee which considered resistance to antibiotics, of which the noble Lords, Lord Rea and Lord Jenkin, were such distinguished members? Will this be taken into account in the Chief Medical Officer's communicable disease strategy which is being developed by the working group on the subject? Should not there be at least a standard reporting system for these types of outbreaks?
	I look forward to the Government's response. To date, they have clearly taken certain actions in response to the two reports, but further action needs to be taken. I am taken by the call of the noble Baroness, Lady Masham, for a head of infection control, but I agree with those noble Lords who have said that much of the answer lies directly at ward level in hospitals. I look forward to the Minister's response.

Earl Howe: My Lords, I should like to add my thanks to the noble Baroness, Lady Masham, for giving us the opportunity to debate this important subject at greater length than was possible during Starred Questions on 8th March. Like her, I found the report by the National Audit Office a shocking read. It would appear that the postcode lottery in the NHS operates on more than one level. Even if one is lucky enough to live in an area where expensive treatments are routinely available, one may nevertheless find that the record of infection control in one's local hospital makes a visit there as an in-patient a more than usually hazardous enterprise. That is not something that we should tolerate in today's NHS, and the Government are right to have devoted considerable attention and energy to the issue.
	What we should not do, it seems to me, is to fall victim to the temptation of trying to identify a single, golden prescription to cure the problem. The striking thing that emerges from successive NAO reports is that the deterioration in standards is not a simple matter. It results from a range of shortcomings, both clinical and managerial, that together give rise to the very worrying statistics to which the noble Baroness has referred.
	Responsibility for the control of infection rests at a number of levels. Indeed, it is an issue that, perhaps par excellence, exemplifies the principles inherent in the term "clinical governance". In another place last week, during a debate on hospital hygiene, the Minister, Gisela Stuart, remarked that clinical governance is as important as corporate governance. I would not disagree with her. What I would add, though, is that on an issue such as hospital hygiene it is hard to separate the two. The fact is that a major outbreak of MRSA can deal a body blow not only to the health of patients but also to the budget of a hospital. Any responsible chief executive will wish to minimise that dual threat as far as humanly possible.
	There is, however, a lack of clarity as to how the lines of accountability in the NHS really run in matters of health and safety. The noble Baroness asked what the role of the Health and Safety Executive is in the NHS. The question is by no means an abstract one. A clear theme permeating the recent NAO report is that hospital hygiene is a task that suffers from a failure of ownership. At trust level, many hospital chief executives are not taking their responsibilities seriously enough. Some hospitals seem to operate in a way that is positively dysfunctional; no link between infection control teams and cleaning staff; no consultation of infection control teams by the management when awarding contracts for cleaning, catering and laundry; no reporting of infection figures to the chief executive; no direct involvement by the chief executive in the hospital infection control committee. There are of course beacons of good practice, but it is perhaps no wonder that across the NHS as a whole, hard data on the incidence and effects of hospital infections are unavailable. We should have such data.
	On 8th March the Minister expressed the view that much of the fault for poor standards of hygiene lies in the policy of contracting out cleaning services to the private sector. I respectfully put it to him that the jury is still out on this. It is apparently not a theory which the NAO have thought fit to flag up.
	The Minister in another place last Thursday was much more tentative about laying the blame at the door of compulsory market testing. If cleaning staff are failing to deliver a proper standard of cleaning, that is not just a reflection on them; it is a reflection on the way that the contract was awarded and on the standards set; on in-house training; on the monitoring systems within a hospital; on the competence of chief executives; and on clinical staff on the wards.
	I wonder, though, whether the Minister has taken account of experience in the United States, where during the past decade there has been a marked decline in the number of patients who developed a bacterial infection while being treated in intensive care units. A recent report by the Centers for Disease Control and Prevention stated that since 1990 infection rates have declined by between 31 and 43 per cent in intensive care units at 285 hospitals in 42 states. One reason for this decline is better training programmes and better monitoring by hospitals to prevent infections from occurring. Does the Minister agree that such lessons could be usefully taken on board in the UK, and will he study them?

Lord Hunt of Kings Heath: My Lords, I am grateful to the noble Baroness, Lady Masham, for raising this issue. As she said, it is a subject of immense importance. My noble friend Lord Rea described the noble Baroness as a "terrier", who continually shakes things up to make things happen. As someone who is continually being shaken up by her, I know what my noble friend means.
	I also pay tribute to my noble friend Lord Turnberg on his excellent maiden speech. He is a distinguished physician academic; he was an outstanding president of the Royal College of Physicians and is an enormously influential leader of his profession. He is most welcome to our debates on the health service.
	I want to reassure all noble Lords who have spoken that the Government take the matter of infection control in hospitals very seriously indeed. It is a matter on which we are determined to continue the action that we have already taken to deal as effectively as we can with the problem.
	We are now treating more patients than ever before, including many who, only a few years ago, could not have been treated at all because the technologies did not exist. As my noble friend Lord Turnberg said, these new treatments, while improving people's health, may present a greater opportunity than in the past for infections to get a foothold.
	Not all hospital-acquired infection is preventable but undoubtedly a proportion is. The recent NAO report, to which many noble Lords referred, suggested that 15 per cent may be preventable.
	It is clear that some people do die either as a direct result of a hospital-acquired infection or with the infection playing a substantial part. The noble Baroness, Lady Young, referred to the recent NAO report which quoted figures of 5,000 and 15,000 respectively. As I said in my answer to the noble Baroness's Starred Question a few weeks ago, we need to treat that figure with caution because it was based on a crude comparison drawing on old data from the US. Our recent estimate is that 1,200 deaths a year are caused by hospital-acquired infection and that HAI has contributed to a further 3,500 deaths. Those figures themselves are striking and underline the need for determined action.
	As far as costs are concerned, as other noble Lords have mentioned, the NAO report estimated that HAI may be costing the NHS as much as £1 billion per year. Again, we have reservations about the accuracy of those costs because the figure was based on the experience of one hospital and it is simply not possible to derive an accurate estimate of the overall cost to the NHS on that basis.
	The total cost of all NHS activity to prevent HAI is almost impossible to assess also because much of this activity needs to be a fundamental, integral and incalculable part of the day-to-day work of doctors, nurses and other healthcare staff. That message was reinforced by many of the comments made by noble Lords tonight. Some estimates of the cost to the NHS of treating hospital-acquired infection have been made and, in 1988, this was estimated to be £111 million annually. Another study in 1993 put the cost in surgical patients at £170 million. Those are substantial figures.
	Where infection is avoidable, it is unacceptable that action is not taken to avoid that infection. We have done much already to strengthen infection control. The Department of Health and the Public Health Laboratory Service have jointly funded a national surveillance scheme for hospital-acquired infection which enables hospitals to compare their performance against the national data. I pay tribute here to the work of my noble friend Lord Turnberg as chairman of the Public Health Laboratory Service. I also noted that he rather non-controversially mentioned the issue of resources for the laboratory service. I understand that discussions are ongoing between himself and my ministerial colleagues on that matter.
	In 1998, in order to provide the National Health Service with tools to help with the improvement of infection control, the Department of Health commissioned Thames Valley University to develop national evidence-based guidelines for preventing hospital-acquired infection. The three component parts of this first phase will be completed by the end of July. They include general principles for preventing infections in hospitals, which crucially include hand hygiene--something that I will come to in a moment; universal infection control precautions and the isolation of patients with infections--in answer to the point raised by the noble Baroness, Lady Masham.
	In addition, in March 1999, following the Government's response to your Lordships' very important Select Committee report on antibiotic resistance, the Department of Health issued an action plan on antibiotic resistance which included action to strengthen infection control processes.
	Last November, the controls assurance programme was launched. It includes an infection control standard. This standard, which was developed in partnership with infection control specialists, requires acute NHS trusts to ensure that,
	"there is a managed environment, which minimises the risk of infection, to patients, staff and visitors",
	and NHS hospitals will be required to produce statements setting out their plans to implement all of the requirements by July 2000. I can assure the noble Countess, Lady Mar, that the progress made by trusts in meeting those plans will be assessed locally by auditors and nationally by the Commission for Health Improvement and the Audit Commission. I think those mechanisms are appropriate to a managed service which is a characteristic of the National Health Service.
	To reinforce the work aimed at strengthening infection control, we have set out an action plan which we sent to trusts in February. The aim of this plan is to strengthen services to prevent and control communicable diseases, especially HAI, and to take action to reduce antimicrobial resistance including the particularly serious problem of MRSA. We are doing that by strengthening prevention and control of infections in hospitals; securing appropriate healthcare services for patients with infection; improving surveillance of hospital-acquired infection--here I very much agree with my noble friend Lord Turnberg and the noble Lord, Lord Patel--and monitoring and optimising antimicrobial prescribing. The plan sets out a detailed timetable for specific actions to ensure that the criteria set out in the controls assurance standard on infection control are met. Early feedback suggests that solid improvements are already being made. I refer, for example, to the direct involvement of chief executives in infection control issues and to the securing of additional resources.
	The noble Earl, Lord Howe, asked about the work of the Chief Medical Officer in relation to communicable disease strategy. This is a major piece of work which is being led by the Chief Medical Officer. I can assure the noble Lords that infection control and surveillance will be identified as a priority for action.
	The noble Baroness, Lady Masham, prayed in aid Florence Nightingale looking down on the standard of cleanliness in hospital wards and, more generally, the noble Baroness, Lady Young, called it "tender loving care". I believe that there is no doubt that this represents a major challenge for the health service. Hand washing is one of the simplest yet one of the most important actions to help to prevent infection. I understand that this is not just an issue for the National Health Service; it is a challenge facing many other healthcare systems too. We gave clear guidance to the NHS a few months ago on this matter and the control assurance programme to which I have referred requires hand-washing policies to be in place and audit programmes to pick them up; but I accept the point that, in all of this, particularly senior doctors and nurses have to lead by example. I shall not debate with the noble Earl, Lord Howe, his view of market testing and its impact on cleanliness, but I do believe that this is a major area which we have to target to improve the standard of cleanliness on the wards. I also very much accept that ward sisters have a crucial leadership role in this. That is why we are giving each ward £5,000 directly to empower ward sisters to improve the environment. Just a week ago, we sent out national standards for environmental cleanliness in hospitals. By issuing those national guidelines, we are giving ward sisters a key tool to bring about local improvements.
	Tackling hospital-acquired infection is an area where action needs to be taken at local level. In that, collecting data is important to provide a national picture against which to monitor trends and performance. I very much accept the points that noble Lords have made concerning the issue of surveillance.
	Time presses on and I think I ought to come to the issue around what I might describe as "performance management". I have listened very carefully to the comments of noble Lords. My noble friend Lord Rea talked about the need for senior management support for infection control teams. The noble Lord, Lord Patel, raised the issue of the commitment of the boards of NHS trusts to take effective action. The noble Lord, Lord Clement-Jones, asked whether clear accountability is in the system to ensure that the action required is taken. I am satisfied that we have the tools and the management processes to ensure that the appropriate action is taken.
	There can be no running away from responsibility. I do not seek to take responsibility away from the department, the NHS Executive or senior managers at trust board level. I have noted carefully the suggestion of the noble Baroness, Lady Masham, that a general or a tsar be appointed. I certainly understand the concerns that she and other noble Lords have raised about whether chief executives are sufficiently committed to driving and leading change and to the necessary procedures and monitoring in this area. I agree that the report of the National Audit Office was not at all positive or helpful in that respect. The lack of perceived control and involvement at chief executive level has to be seen against a background where, in the past, infection control and infectious diseases have been considered a rather unfashionable area. Sometimes the task was delegated to junior officers, and boards received reports on the matter of infection control.
	In conclusion, I want to assure noble Lords that in the NHS action plan and through controls assurance chief executives of trusts have specifically been made personally accountable for hospital-acquired infection. It is a "must do" for the NHS, as set out in the national priorities guidance. Trust chief executives are personally accountable for dealing with this issue. In addition, regional directors of public health are working with regional directors of performance management and are charged with ensuring that the NHS has robust infection control arrangements in place, including the implementation of clinical governance arrangements and the achievement of controls assurance standards within appropriate time-scales.
	In this very short debate I have not been able to answer all the points put to me, but I hope that I have assured all noble Lords that the Government take this matter extremely seriously; that we have put in place a number of policies and procedures designed to reduce infection as much as it can be reduced; and that we have robust performance management measures in place to ensure that they are acted on.

Child Support, Pensions and Social Security Bill

House again in Committee on Schedule 4.

Baroness Turner of Camden: moved Amendment No. 125:
	Page 103, line 19, leave out from ("LET") to ("20") in line 21.

Baroness Turner of Camden: In moving this amendment, I wish to speak also to Amendment No. 126 with which Amendment No. 125 has been grouped. The Government propose that the state second pension, instead of being 20 per cent of earnings above the lower earnings level, should be 40 per cent of earnings up to £9,500 but only 10 per cent of earnings between £9,500 and £21,600. Raising the accrual rate to 40 per cent on the bottom slice of earnings is a positive step to help the low paid. In fact it would be even better if the Government would do what I should like them to do and restore the earnings link for basic pensions. That really would lift the low paid right out of poverty.
	Nevertheless, I accept that what the Government are proposing is designed specifically to help the lowest paid and in that respect they are to be applauded. But reducing the accrual rate to 10 per cent on the middle slice of earnings is an unnecessary complication and perpetuates for all except the very low paid the cuts in SERPS which were made by previous governments. Do the Government think that people earning between £9,500 and £21,600 are somehow well off? I really do not think that that can be the case.
	The effect of the amendment would be that the accrual rate on all earnings above £9,500 would remain, as now, at 25 reducing to 20 per cent over the next 10 years. That would be fairer to the bulk of people earning between £9,500 and £21,600 who are not well off and are very moderate earners by any criteria. I hope that the Government will be prepared to look with some favour on the proposed amendment. I beg to move.

Baroness Hollis of Heigham: Amendments Nos. 125 and 126 seek to change the rates at which entitlement to state second pension will be accrued for different bands of earnings. The accrual rates are set out in Schedule 4 to the Bill. These amendments would increase the accrual rate on all earnings above £9,500 from 10 per cent to 20 per cent. That would mean that not only would moderate earners be even better off under the state second pension than under our proposals--without the benefits tapering off as someone moves further up the earnings scale--but also higher earners would be considerably better off. Our proposals mean that those earning between the annual lower earnings limit and £9,500 will be treated as if they had earned £9,500. They will receive more than twice the amount that they would have received from SERPS.
	Moderate earners--those earning up to £21,600 a year--will also receive more from the state second pension, despite the 10 per cent accrual rate on their second band of earnings. Those earning from £21,600 up to £26,000--the current upper earnings limit--will receive the same as they would have done from SERPS. The formulae for setting the two bands of earnings above £9,500 are designed to achieve this. In effect, the formulae work by clawing back the extra accrued on the first £9,500 of earnings from those who earn more. But it does this progressively on earnings in band 2. So someone will need to earn £21,600 upwards before they cease to benefit from the boost of the lower earnings threshold--the boost from the accrual rate of 40 per cent on the first £9,500 of their earnings. The lower someone's earnings are, the more they will benefit proportionately. We believe that this is the right focus of resources.
	The amendments would mean that everyone would be given more in state second pension than they would have received from SERPS. Moderate earners would further benefit from the higher accrual rate on earnings between £9,500 and £21,600. But also, because there would be no claw-back to offset the doubling of the accrual rate on earnings up to £9,500, higher earners would also get more under state second pension than they currently do under SERPS, regardless of their earnings.
	As a result of the amendments, someone earning over £26,000 would get 27 per cent more than under our proposals for state second pension while a moderate earner on £15,000 would get an extra 18.5 per cent. But low earners would not be any better off. In addition, any change to accrual rates would need to be reflected in the rebate arrangements, to prevent people from having an incentive to opt back into the state scheme. That further adds to the cost.
	The formula is specifically intended to give a significant boost to low earners together with gains for all moderate earners while maintaining the position of higher earners. We believe that this strikes the right balance. As a result of that, I hope that my noble friend will agree to withdraw her amendment.

Baroness Turner of Camden: I thank my noble friend for her comprehensive explanation of the Government's position. However, she said that my amendment would not give extra benefit to higher earners. I thought it was the Government's intention that higher earners would not be in the second state pension tier at all but would be encouraged on to the private market. In most cases, I would imagine, people earning over £21,500 would, when the pension package is fully operative, either be in stakeholder or in occupational pensions. We are talking only about people on very moderate earnings--between £9,500 and £21,600--since the others are most likely to be catered for by the private market. I do not entirely support what my noble friend has said but I do not intend to divide the Committee at this point. I shall look at the matter again when we come to the Report stage. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 126 not moved.]

Baroness Turner of Camden: moved Amendment No. 127:
	Page 103, line 30, leave out sub-paragraph (5).

Baroness Turner of Camden: This amendment is grouped with Amendments Nos. 129, 130 and 131. The December 1998 Green Paper proposed that the state second pension should become flat rate five years after the introduction of stakeholder schemes--that is, in around 2006. Clause 35(14) would allow the second appointed year to be any year from 2004 onwards. The amendment would ensure that it could not be earlier than 2006-07.
	Amendment No. 131 would make an order providing that either the first or second appointed year would be subjected to the affirmative procedure in both Houses.
	As I said earlier, in my view the flat-rate second tier pension is really just a top-up on an inadequate basic state pension. When it becomes flat-rate, people on very moderate incomes will be pushed towards the private sector. As we have heard earlier, that is the Government's real intention. This is no doubt part of the Government's desire to reverse the present 60:40 balance between state and private pension provision.
	The Government are doing much to provide better value from private pensions. Arrangements are to be put in hand pushing down charges and setting standards. That is to be welcomed. But people still face the greater risks represented by money purchase arrangements available through stakeholder provision.
	I am unhappy about the pressure that will be applied to people with very modest incomes to take the risk of going on to the private market. What about the position of people with earnings that vary up and down around the £9,500 threshold? Would it make sense for them to switch between the state second tier pension and the stakeholder pension each time one or the other seems to offer better value? Switching to a flat-rate second tier pension needs careful consideration; it certainly needs scrutiny by both Houses of Parliament. I beg to move.

Lord Skelmersdale: If this amendment is agreed to, I cannot call Amendment No. 128.

Baroness Hollis of Heigham: This group of amendments concerns the introduction of the state second pension and movement to stage 2 of the scheme.
	Amendment No. 127 would delete the power to bring in stage 2 of the state second pension and so would mean missing the opportunity to help moderate earners shift into funded schemes.
	Amendment No. 129 would include on the face of the Bill an undertaking that the second stage would not be introduced before the 2006-07 tax year.
	Amendments Nos. 130 and 131 would subject the order which will set the date of implementation for state second pension to parliamentary debate. It would also make the setting of the start date for the second stage of the state second pension automatically subject to debate in both Houses of Parliament.
	It may be helpful if I remind the Committee about what we are seeking to do. We are trying to encourage those who can to make provision for their retirement through the introduction of stakeholder pension schemes. These are due to start in 2001. But we accept that it will take some time for these schemes to establish themselves and for people to move out of the state scheme into such funded pensions.
	I do not believe that it is right to wait for that to happen before we start to help those for whom a funded scheme is not an option. That is why we are reforming SERPS by introducing the state second pension, which will provide help to low earners, carers and long-term disabled people with broken work records. We want to introduce that as soon as possible.
	The introduction of the state second pension is at the heart of our pension reforms. As a result, it will help those who need it and reduce the number of people who are dependent on the minimum income guarantee. We want as many people as possible to retire on income above that, but it takes time to build it up. That is why it is important that the scheme is implemented as soon as is realistically possible.
	Once we have parliamentary approval for the legislation underpinning these reforms to SERPS, we shall concentrate on ensuring that the necessary administrative procedures are in place to enable an early delivery date. As I have said, we believe it is right to encourage those who can to provide for their own pensions through stakeholder schemes. When stakeholder schemes have become established, we shall encourage those moderate to high earners who have a significant part of their working life ahead of them to contract out of the state scheme. We shall encourage them to build up their own funded pension provision, perhaps through stakeholder schemes, for which they will receive an earnings related national insurance rebate paid into their pension fund.
	We expect stakeholder pensions to be most suitable for people earning between £9,500 and £20,000 a year. However, carers and disabled people who are out of the labour market are unlikely to be in a position to invest in them, and most people earning less than £9,500 are likely to find that their income is too low for them to save more for their retirement, which is why we need S2P.
	Stage 2 of S2P will provide that extra help by further focusing resources on those who need help most. The state second pension will become a flat-rate scheme in which anyone who remains within the scheme will be treated as if they earned £9,500 or whatever the lower earnings threshold is at that time. That means that low earners, carers and long-term disabled people will continue to be considerably better off than under SERPS, but it means that higher earners will no longer, as at present, get the earnings related advantage that they do in stage 1.
	As I have explained, the scheme will continue to be earnings related for moderate and higher earners who are contracted out. That will encourage them to provide for their own retirement by means of a funded pension scheme but it will not be compulsory for anyone to opt out. We do not think it prudent to go on to a flat-rate state second pension scheme in one stage. It would cause significant disruption at a time when alternative forms of provision are still in their infancy. We believe that we need to be sure that stakeholder pension schemes have become well established and that moderate earners--that is, the group earning £9,500 to £20,000--have access to low-cost, flexible, funded, safe schemes before we make such a move. We do not believe that it would be responsible to set an arbitrary date now, as Amendment No. 129 would do. It is more prudent to wait and assess when the time is right to make the transition. That will be done in consultation with the organisations concerned. I cannot give the noble Lord any more information than that, but I shall no doubt try!

Lord Higgins: I hope that the noble Baroness can clarify one point. Is it the case that stage 1 of the state second pension could begin before the stakeholder scheme. Can it come in ahead of stakeholder pensions being introduced? If not, why not?

Baroness Hollis of Heigham: I do not see how it could. The state second pension has already been carried by the Bill that we debated last summer. The provision is already 12 months ahead. Secondly, in consultation with the industry we have obtained very clear agreement as to how we should proceed. It would be quite wrong now to hold back stakeholder schemes for another year in order to bed down the state second pension. It seems better to allow the arrangements negotiated with the industry to proceed. I believe that the noble Lord wishes to intervene.

Lord Higgins: I was not suggesting that the stakeholder scheme should be delayed. I was asking whether it would be possible for the state second pension to begin ahead of the stakeholder scheme. The noble Baroness said that that was done in previous legislation. We are dealing with that legislation now. Why is it not possible to begin stage 1 of the stakeholder scheme immediately?

Baroness Hollis of Heigham: I have never known any social security legislation in relation to which it was expected that the new scheme would be started the day after. For example, it is necessary to migrate current information, to make sure that the IT systems are robust, to do complicated assessments, particularly if we want to meet our undertakings to give out statements of information to people.
	If the noble Lord is simply asking why we are waiting a year or so as opposed to introducing the scheme right away, it is a complex and important new scheme. We need to make sure that the IT arrangements, the calculations and the migration of clean data go through. I cannot conceive of any scheme, even a simple one, that one would expect to start the day after the Bill had received parliamentary approval.
	Our difficulty, on which the noble Lord has pressed me and which is an honourable difficulty, is that we cannot give a precise timetable as to when we move from stage 1 to stage 2. That is precisely because we want to be sure that, if we are encouraging people to move into the private funded market, we want to make sure that good, safe, cheap private funded provisions--that is, the stakeholder provisions--are properly available and performing to their CAT benchmarks. That is why we do not want to be more precise and why I cannot help the noble Lord beyond that. Obviously, that will be done in discussion with the industry. We need to know the number of stakeholder pension providers. We need to look at the numbers taking out such a pension and the level of security provided. As a guide, we have said that we think it may be about five years after the introduction of stakeholder pension schemes, which, if they are introduced in April 2001 (10 months away) would be from April 2006.
	Our proposal to move to the second stage when stakeholder pension schemes are established and conditions are right, is designed to give us the flexibility to make sure that we have a strong incentive to offer to moderate and higher earners a move to funded schemes while the state scheme focuses, as my noble friend recognised, on those least able to provide for themselves. Amendment No. 127 would deny the Government that flexibility.
	Amendment No. 129 is in keeping with the Government's thinking on the timing of moving to the second stage of the state second pension. While I do not believe that the face of the Bill is the right place to make such provision, I agree that noble Lords will require the necessary information to decide whether stakeholder pension schemes are properly established.
	Amendments Nos. 130 and 131 would subject the commencement orders, which set the dates for the introduction of the first and second stages of the state second pension, to parliamentary debate. The Bill provides that the orders making these appointments should not be subject to parliamentary debate. The order-making procedure is very similar to commencement orders, which are not usually subject to the affirmative or negative procedures of Parliament. We have, however, said quite clearly that we shall not move to the second stage until we are sure that the time is right. Therefore, a decision will be taken later as to the date on which we shall move to the second stage. I am happy to repeat the undertaking that before we do that we shall supply the necessary information to both Houses when the time comes. If at that time your Lordships should seek further parliamentary debate or scrutiny, you will be free to do so. I hope that on that basis my noble friend is able to withdraw her amendment.

Baroness Turner of Camden: I thank my noble friend for her response. I remain very concerned about the change to the flat rate provision. As I said earlier, it appears to be part of government policy--it has been confirmed by the response of my noble friend--to encourage people to move away from public and into private provision. When the Minister referred to the necessity to get people to provide for their retirement, she made it clear that that provision was in the view of government to be via the private market rather than contributions to any kind of public scheme. I am not happy with that. On the other hand, I am glad that my noble friend is able to give the Committee an assurance that there will be a full opportunity in both Houses for scrutiny when the Government decide eventually to move towards flat rate provision for the second stage pension. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Astor of Hever: moved Amendment No. 128:
	Page 103, line 34, at end insert--
	("(5A) Sub-paragraph (5) shall not apply to those working for companies with fewer than five employees.").

Lord Astor of Hever: Amendment No. 128 proposes that stage 1 of S2P be kept for those working for companies with fewer than five employees. This will ensure that in the event that they are missed by stakeholder pensions, they will have access to some earnings-related provision and will be less likely to be forced into reliance on the minimum income guarantee when they reach retirement. Under the current provisions such employees will be at risk from the gap in pensions coverage that arises from their exemption by the Government from stakeholder pensions. I recall this point being debated during the passage of the Welfare Reform and Pensions Act last year which first introduced stakeholder pensions.
	There must be a risk that an employee of a small company may be missed by stakeholder pension providers. In that case he would be in a bad position if he earned more than £9,500. He would be poorly rewarded by stage 2 of S2P and at some levels of income would be significantly worse off than would have been the case under SERPS. This affects a sizeable proportion of the population. Sole traders make up 64 per cent of all businesses and account for 12.7 per cent of employment. Those with one to four employees make up 25 per cent of all businesses and account for 10.9 per cent of employment. We on this side of the Committee believe that this is a measured and sensible amendment that understands the burdens on small business but also ensures that there is effective pension coverage for a large number of the working population who would be at some risk under the Bill. I beg to move.

Lord Goodhart: We on these Benches co-operated with the noble Lord, Lord Higgins, and the noble Lord, Lord Astor, on restricting the burden of administration requirements when we dealt with the working families' tax credit. In that case we thought it quite right that the administrative burdens on employers should not apply to small ones. However, in this case it is proposed that pension rights should vary according to the number of people that an employer employs. We find that proposition completely unacceptable.

Lord Haskel: I wonder why the noble Lord wants small employers to be free from unnecessary bureaucracy but not to be good employers. Small companies are just as keen as large ones to be good employers, to retain their staff and to attract the best people, and part of that is to ensure that they make proper pension arrangements. To excuse small employers on the basis that there is more bureaucracy confuses two propositions. Small companies do not want to be involved in unnecessary bureaucratic procedures but they do want to be good employers, which means providing good pensions for their employees.

Lord Astor of Hever: Does the noble Lord accept that under this Government small businesses have suffered a continuous assault by red tape? We want to do everything possible to cut down that red tape.

Lord Haskel: I do not accept that. I accept that there are two kinds of red tape. There is unnecessary bureaucracy, and perhaps small companies have suffered from it. However, they have not suffered from bureaucracy which is designed to improve the well-being of their employees.

Baroness Hollis of Heigham: I agree with almost everything that the noble Lord, Lord Goodhart, and my noble friend Lord Haskel have said. I am baffled by the push of the amendment. The amendment as tabled means that stage 2 of the state second pension will not apply to people working in companies with fewer than five employees. Instead of moving to a flat rate scheme, stage 1 arrangements will continue to apply to them. There is less work involved in stage 2, which is a flat rate scheme, than in stage 1. I do not know whether the noble Lord believes that his amendment exempts all employers with fewer than five employees from the entire state pension scheme. What his amendment does is to stop people from moving from stage 1 to stage 2, which cannot be sensible.
	We propose the lower earnings thrust in stage 1 because we do not have the stakeholder pension in place. When the stakeholder pension is in place and people are able to contract out to it, we propose that at the second stage S2P should become flat rate and everyone will be treated as if he has earnings of £9,500, or whatever is the lower earnings threshold at that time. If anything, I should have thought that that would have reduced rather than increased the burden on employers. Even if one accepts that the provision is about burdens, and my noble friend does not accept that--it is about rights to entitlement--staying with differential schemes according to incomes over £9,500, which is stage 1, would increase the employer's burden. Going to stage 2 with small employers should reduce it.
	The key point is that those contracted out of the state scheme by funded alternatives will continue to receive the same level of help as under stage 1. Enhanced national insurance rebates and state scheme top-up payments will continue to be paid, thus providing earnings-related incentives for individuals to remain in or join a private pension scheme. This, in particular when coupled with an employer's contribution, should go a long way to ensuring that people with funded provision receive a decent income in retirement.
	The exemption is modelled on the stakeholder pension. We provided it there in order to strike a sensible balance. Simply because, with stakeholder pensions, small employers are not required to offer access to a stakeholder scheme, this does not mean that they will not do so. In fact, we hope that many will. Equally, it does not prevent employees from taking out a stakeholder pension via another route. Many of those who work for small employers change jobs frequently and may prefer to choose their own stakeholder scheme.
	We shall move on to the second stage of state second pension only once stakeholder pension schemes are established and we are convinced that all moderate earners will be able to join a low-cost, flexible scheme. So access to stakeholder schemes for all employees will be an important determinant of when we move to the second stage. It is important to differentiate between linking individual entitlement to a state benefit to the size of someone's employer and stakeholder access provisions, which are a requirement on the employer.
	There are good reasons why operating two different forms of state second pension for employees, depending on the size of the employer they work for, would not be sensible. The decisions they have to make about their pension provision would be made more difficult, not less. Some moderate earners would end up staying in the state scheme simply because they were confused by the conflicting messages being given, and so on.
	I am puzzled by the amendment. It seems to add more complexity for employers and to encourage people from staying in a state scheme when they would be better off going into a stakeholder scheme. In the light of that reply, I hope that the noble Lord will feel able to withdraw the amendment.

Lord Astor of Hever: I am grateful to the Minister for that response. It has reassured me. I understand the limitation of the amendment. In the light of that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Schedule 4 agreed to.
	Clauses 32 to 34 agreed to.
	Clause 35 [Supplementary]:
	[Amendments Nos. 129 to 131 not moved.]
	Clause 35 agreed to.
	Clauses 36 and 37 agreed to.

Baroness Turner of Camden: moved Amendment No. 132:
	After Clause 37, insert the following new clause--
	:TITLE3:INCREASE OF BASIC RETIREMENT PENSION
	(" . The Secretary of State shall each year increase the basic retirement pension by not less than an amount equivalent to--
	(a) the percentage increase in the general level of earnings during the preceding year; or
	(b) the percentage increase in the retail prices index during the preceding year,
	whichever is the greater.").

Baroness Turner of Camden: I return again to the issue of indexing the basic state pension. It can be no surprise to the Government, I am sure, that their 75p increase has outraged most pensioners. MPs have encountered this anger in the recent elections, as have many party workers. The £150 fuel allowance has done nothing to assuage that anger. For most pensioners income is more important than what they regard as handouts. "If we were properly paid, we would not need handouts. We could pay our bills like people in employment". That sentiment has been expressed frequently to me.
	As I said at Second Reading, I have yet to meet a rich pensioner. The reason advanced by the Government for their refusal to tackle the basic problem of the state pension is that to give everyone the increase we seek, and which was promised by the previous Labour government when the Castle plan was first implemented, is that it would mean that everyone would have the increase, including rich pensioners. I should like to spend some time dealing with the issue of rich pensioners because it is not adequate for the Minister constantly to reiterate the statement that the majority of pensioners are rich without advancing any facts in support of it.

Baroness Hollis of Heigham: In all fairness, I cannot let my noble friend get away with that. I have never said that most pensioners are rich. I have said that most pensioners are not poor. That is very different.

Baroness Turner of Camden: The noble Baroness has used occasionally the term "rich pensioners". Indeed, in the handout that I have, Mr Darling says that it shows that average pensioner incomes as a whole are rising faster than average earnings, and that some have done very well. Just because a few people, mostly recently retired, can afford a once-in-a-lifetime holiday in Florida does not mean that pensioners are well off but simply that some save up--something the Government are intent upon encouraging people to do.
	I should like to explain why I am so sceptical about the Government's statement about well-off pensioners. I shall not use the term "rich". How are those figures arrived at? From what baseline? Does it include the value of various benefits paid to people on the basic pension who otherwise could not exist at all? If so, being on benefits scarcely constitutes wealth. Or is Mr Darling also referring to people who receive generous occupational pensions? If that is so, that is interesting. Most occupational pension schemes have been designed on the assumption that they will top up the basic state pension. Most occupational pensions are not fully index-linked to the retail prices index. Indeed, the usual formula, even in what is known as "good" schemes--and I have negotiated a good many of them in my time--allowed for annual increases in line with the retail prices index to a maximum figure of 5 per cent per annum. In the years--this has occurred sometimes in the past 20-odd years--when the RPI exceeded 5 per cent, the pension was nevertheless increased only by 5 per cent. Obviously, over time the value of the pension would erode, particularly in relation to the wages index.
	Therefore, the argument that pensioner incomes have increased by more than the incomes of other people in the past 20-odd years cannot be right. The reason is that the structure was simply not in place for that to happen. Therefore, I return again to the matter of the basic pension. Quite simply, there was no structure whereby pensioners who received an occupational pension could have done better than everyone else in employment. There was provision under which pensions in very good pension schemes were increased in line with the retail prices index--never in line with the wages index--up to a maximum of 5 per cent per annum. That was the standard procedure throughout most of industry and commerce.
	I return again to the matter of the basic pension. Even the promised £2 a week increase, to be put in place possibly next year, will not compensate for the amount that pensioners have lost. As we know--the figures have been quoted often enough--a single pensioner would now be receiving approximately £97 a week. The MIG is now set at £78. Many pensioners who just fail to qualify for the MIG nevertheless are not at all well off. Everyone, including the tiny minority of very well-off pensioners, will have paid for their pensions.
	That is what angers so many pensioners. They are the generation who went through the last world war. They believed that with the introduction of the welfare state they were helping to build a society where people would not be neglected, isolated and impoverished in old age. They resent being told that they are well off when their occupational pension is of the order of £7,000 a year, which is about average, and declining in value relative to earnings, without any improvement worth mentioning in the basic state pension.
	The genuinely rich, for whom the basic state pension is just so much small change, will be taxed anyway. There is a wealth of information available about poverty among pensioners, and even the Government admit that that is the case, otherwise there would be no point in paying everyone the fuel allowance. Incidentally, that is paid to everyone and it is not means tested.
	Further, the MIG will be indexed to earnings rather than prices, although that, of course, is to be means tested. It would be so much simpler if the Government would return to original Labour policy and increase the basic state pension in line with my amendment. There would be a saving in benefits and means testing, which, as we know, is difficult and expensive to administer. The older generation, which deserves better, would cease to feel resentful and excluded. I beg to move.

Baroness Castle of Blackburn: My Amendment No. 133 has the same aim as that of Lady Turner, although it is worded slightly differently. The purpose behind our endless, continuous and continuing campaign to secure the restoration of the earnings link for the uprating of the basic state pension is based on our belief that in a civilised society no section of the community should have to depend on means-testing. The Government talk about social inclusion. What could be more divisive than to say, "Oh, we are going to be kind to the poorest pensioners. Now, madam, you're the poorest; you're all right"? People do not like to be classified as those who need handouts from the taxpayer.
	I must drive home a fact which very few people seem to have grasped. The cost of the basic state pension comes out of the National Insurance Fund. All right, the Government like to pretend that it is not insurance any more, but that is what the fund is and what it is called, whereas minimum income guarantee comes out of the pockets of the taxpayer. I believe that it is odd that this Government do not realise that by insisting on the role of the means test of benefit for the poorest pensioner--the targeted benefit which was very much part of the Conservative philosophy under Lady Thatcher--they are undermining the desire of so many pensioners to be independent of what they see as the dubious charity of the taxpayer. "Ah, but", said the Minister in our debate earlier this afternoon, "if we had not stepped in with our policy"--by, I forget the year, 2010 or 2015--"one-third of pensioners would be on means-tested supplements". Whose fault is that?
	Of course they would continue to be on means-tested supplements while the Government uprate the minimum income guarantee in line with earnings but hold the basic State pension down to the cost of living index which gave us the disastrous 75 pence per week for those pensioners in the last uprating. If the Government hold out any hope of an increase next year, it is simply that they are praying that prices will go up, that the retail price index will save them from another sense of pensioners' outrage about another miserly increase. In any case, when one examines this Government's statistics--and one has to stand back, take a deep breath, put a wet towel around one's head and then the truth dawns--what are this Government expecting? They are expecting--and I think I am correct in saying that the Minister used this figure earlier--that, by the year 2000 and whatever, there will be one in five pensioners still on means-tested benefits. What percentage is there now? It is one in six. So there are going to be more people on means test--however much we argue about the exact figures--by the time the Government have done their pension building in complete form.
	Another great statistic with which we are always dazzled is--I do not want to misquote the Minister--that, by the end of this Parliament, the Government will have spent £6.5 billion more on pensioners. I think I am right.

Baroness Hollis of Heigham: £6.5 billion more.

Baroness Castle of Blackburn: More than what?

Baroness Hollis of Heigham: £6.5 billion more on pensioners than the forecast figures that we inherited and £2.5 billion more on pensioners than would have been the case had we restored the earnings-linked pensions.

Baroness Castle of Blackburn: I am coming to that with great relish. It is £6.5 billion more than Margaret Thatcher's lot. I would not expect it to be the same. Our policy manifesto did not promise no improvement on the present pattern. I do not think a Labour government should make great play with a figure like that. It should be contrasted with previous Labour administrations.
	The Minister has just said it is £2.5 billion more than if they had restored the earnings link. It is fascinating, is it not? It does require a little careful study. One does have to keep a rather cool head when going through this minefield of pensions policies.
	I am going to examine that figure. I think the important thing about the £6.5 billion is who receives the benefit. We are never asked to examine that. Let us return to this point. They are going to spend by the end of this Parliament £2.5 billion. At one stage we heard a higher figure than that, so perhaps some statistical realism has been creeping into the Ministry, but £2.5 billion more than if they had restored the earnings link.
	On whom is that £2½ billion to be spent? Let us have a look. My trouble is that I work all these figures out and then I cannot read them, so I am trying to do it, as best I can, from memory. By refusing to restore the earnings link which a previous Labour government had introduced for keeping the basic state pension in line with national prosperity, a single pensioner in the lifetime of this Government would have received £195 more than they are doing at present. A married couple would have received £312 per year more.
	What have they got to offset that? The Minister talks about this £2½ billion. They should be rolling in it. Right, let us look. They both, single and married, receive the same fuel allowance because, remember, that does not go to the pensioner, the individual; it goes to the household. Therefore, they each receive £150. If they are over 75, then they will receive another £43 from the TV bonus, rebate, whatever it is called.
	If you do some arithmetic, you will find that the single person's £195 has been replaced by £150 or, if he is over 75, £193, because he will receive the TV bonus on top. So it is pretty well level pegging, is it not? He is not receiving anything of that £2½ billion.
	If we look at a married couple, we find a much more damaging picture. We find that married couples under 75 will receive £150 fuel allowance to offset the £312 that they have lost from the refusal to restore the earnings link. Why is that? It is because, of course, the fuel allowance is per household, not per pensioner. If they had been receiving a pensions increase--the earnings link--that would have been per pension. Fuel allowance is per household and, of course, so is the £43 TV licence money which they will receive if they are over 75.
	Therefore, that £195 is reduced, in the case of a single pensioner, to £150 or £193--you do the mental arithmetic. And the married couple's £312 is offset by a mere £150 a year or, if they are over 75, £193.
	I shall be very interested to know whether the Minister challenges those figures, because, if she does not and she accepts them, then she is admitting that it is meaningless to say, "We are spending 2½ billion more on pensioners". It all depends on who is getting what.
	There will clearly be losers among people of modest incomes, among people who may be just over their savings or occupational pension limit for the minimum income guarantee, which is not, after all, so very splendiferous.
	I think that the Government should, at the very least, show a bit more honesty and humility. If they came to us and said, "Look, it costs too much and we are sorry, but we just can't take it on board for the moment", we might disagree and quarrel but we would respect them. However, to come along with figures such as £6.5 billion more than Margaret Thatcher spent, which is not difficult, or to say, "We will be giving to pensioners £2.5 billion more than they would have received if we had restored the earnings link", is to discriminate, is it not? It is almost like the old days of the Poor Law and the deserving poor. People who have saved are not the deserving poor in this Government's estimation.
	I ask the House most seriously to think about what it is doing. We shall go on fighting this battle. We shall go on meeting with pensioners who are 100 per cent behind us because one of the tragedies is that the Government would not listen. In 1996, when some of us were begging the government to include in the manifesto the pledge to restore the earnings link which had been so rudely abolished in 1980, we were told, "We're going to set up a pensions review body. Pensioners will have a voice". I know that I am an old cynic, but I said, "Yes, but who'll be listening?" and, of course, the Government did not listen. That pensions review body unanimously urged the Government to restore the earnings link. What on earth was the use of going through that charade? It reminds me of Glendower in Henry IV, who boasted,
	"I can call spirits from the vasty deep",
	and his companion said,
	"Why, so can I, or so can any man.
	But will they come when you do call for them?"
	Will the Government do what the pensioners unanimously asked in the review body and are still asking? The Government have, of course spent money, but they have done so in a discriminatory way. I can assure the House that pensioners' dignity has never been more alert than it is today. Just like the disabled, they want to be treated as normal people in society, like everybody else, not labelled the poorest pensioner.

Lord Goodhart: We have all listened with great respect to the two noble Baronesses who have spoken from the Government Benches. They undoubtedly make a strong case.
	As we made clear in the House of Commons, and as I tried to make clear earlier in the debate this evening, the position of my party is that we are particularly concerned with the position of the older pensioners. That is why we put forward our own proposals for the age additions. We see this as a problem not only with the basic state pension, but also, for reasons I explained, with the state second pension, which is targeted particularly at those on modest incomes but, as things are now, will end up leaving those who live long enough dependent upon the minimum income guarantee.
	We would prefer the Government to act in that way to deal with the problem of the older pensioners. We see that as a better-targeted and a more cost-effective way of dealing with such problems.

Baroness Hollis of Heigham: I hope that the noble Lord will allow me to intervene. We debated this point much earlier and I believe he accepted my figures. Though I have much sympathy with his analysis of the problem, the statistics do not bear out his assertion that age-related rebates on the state pension, as he suggested, would meet the problems he identified. I had thought that perhaps the noble Lord had accepted that, unfortunately, the statistics do not support what he is seeking to do here. In the light of that, does he agree that it is better to examine the MIG and so forth as more responsive, sensitive and appropriate ways of addressing pensioner poverty?

Lord Goodhart: We have already argued that point. Our position remains clear on this. On these Benches we do not think it satisfactory that people who, when they first become pensioners, do not qualify for the minimum income guarantee, should be forced by a decline in the value of their pensions relative to the value of the MIG to become dependent on it at an advanced age. However, I do not want to reopen that argument because I was coming to the end of my remarks.
	If the Government insist on operating solely through the MIG and will not move in the general direction of giving non-means-tested help even to the oldest pensioners, then, if these amendments are pressed to a vote, we are likely to support the amendments.

Lord Higgins: I cannot hope to match the eloquence or analytical capabilities of the noble Baroness, Lady Castle, and I shall not detain the Committee for more than a moment or two.
	The noble Baroness has rightly drawn attention to the reaction of pensioners to the Government's proposals. That is not outside my own experience, having represented Worthing for a number of years. It was said of that town that people went there to die and forgot where they came from. It is worrying that against this background a huge amount of press publicity has been put out saying that people should not worry because matters will be put right next year, but no specific information has been issued.
	Perhaps I may make three points. First, the policy of the Government is in total chaos as far as means-tested or non-means-tested benefits are concerned. On the one hand, the Government stress means testing, but, on the other hand, we have seen a series of gimmicks put in place for TV licences and winter fuel payments which are not means tested. To a considerable extent those benefits reach many who do not in fact need the help.
	Secondly, the figure of £6.5 billion has been mentioned by the noble Baroness as representing the increase in the amount targeted for pensioners. Perhaps I may ask her a specific question. Does that £6.5 billion take account of the changes in advance corporation tax that have removed roughly the same amount from private pension schemes?

Baroness Hollis of Heigham: The figure represents the extra spend by government. It not a consequence of any alterations in tax regimes which "de-formed" the spending and investment patterns of private pension schemes.

Lord Higgins: We say simply that there is £6.5 billion of extra spend and that £6.5 billion, roughly speaking, has been taken away from private pension schemes, which are suffering as a result. So, apparently, no net change has taken place at all.

Baroness Hollis of Heigham: The noble Lord has far more experience of Treasury matters than I, but he will know that changes in taxation, such as whether taxes such as ACT are changed or abolished, or whether corporation tax is reduced, do not make his argument any more valid than if he were to say that extra moneys gained from reductions in corporation tax, making our corporation tax lower than anywhere else in Europe, are ploughed back to employers and thus "stolen" from pensioners. The noble Lord knows perfectly well that it is not possible to make an argument for read-across of that kind.

Lord Higgins: I do not accept that for one moment. The reality is that the effects of the changes in the tax regime by this Government have reduced the available funds which private pension schemes previously enjoyed by roughly the same amount as that by which the noble Baroness has told us that the Government have increased payments to pensioners. People in occupational schemes are just as much pensioners as people in state schemes.
	I have only one final point, and it is the only one the noble Baroness, Lady Castle, omitted; that is, we have this huge government windfall of £22 billion from mobile phone licences; what are the Government intending to do with it? They intend to reduce borrowing. That will hit annuity rates still further and have an even more adverse effect on pensioners.

Baroness Greengross: Perhaps I may say how grateful I am to the noble Baronesses, Lady Castle and Lady Turner, for giving us another opportunity to debate state pensions. Again, I must still declare an interest in that I work for Age Concern.
	First, I recognise that the Government have introduced measures which help people. They are very welcome and have made a big difference to the poorest pensioners. The rise in capital limits for income support from April of next year will especially benefit those with a small amount of savings. In fact, every year since 1988 when the current limits were set, I have written to successive Chancellors suggesting that they do this. So I am pleased that the Treasury listened, even though it took a long time.
	However, time and again people say to Age Concern that what they really want is a decent level of state pension and the choice as to how to spend their money. We know now about the anger and disappointment people felt at the 75p increase this year. That is why I agree with the noble Baronesses that both the level of the basic pension and the current uprating system are unacceptable.
	Older people were promised that they would share in the rising prosperity of our nation. Not everyone is, despite the good things the Government have done. The poorest benefit from above-inflation increases in means-tested help, and the minimum income guarantee, but only if they claim it. It is good that the Government are launching a take-up campaign to find the 750,000-odd people who are missing out. But if the pension had been raised last year to £75, the same as the MIG level then, a take-up campaign would not have been required.
	Restoring the link with earnings would be one popular way of addressing the problem. But I am the first to recognise that it is difficult to turn back the clock. There may be other ways of assessing overall increases in living standards, particularly for the poorest pensioners. Last month, Age Concern published a new report from the Family Budget Unit arguing cogently for minimum income standards for older people and, despite the difficulties, I should like to see the Government investigate the use of budget standards to establish what income levels people need to achieve an adequate standard of living. Such assessments, regularly updated, could provide an important guide as to how much pensions and benefits should be uprated. They could include all types of income as I realise that although the state pension may be £67.50, many pensioners receive more income from additional pensions, savings, the MIG, winter payments, rebates on council tax and so forth. But for working families and single-parent families, and even for older workers, figures are now quoted for their minimum, taking account of the working families' tax credit, the New Deal and so on.
	Can the Minister give that idea some thought for those who are already retired? I know she will say that the MIG is one part of an older person's minimum income standard, but this year it starts at just over £78 a week. That is just £4,000 a year. The research by the Family Budget Unit suggested that an older person aged 65 to 74 needed between £99 and £125 a week, which is why Age Concern suggested that the state pension should be at least £90 a week now.
	Another way forward might be to link future increases in the pension more realistically to the cost of living increases for older people. If the RPI as a way of determining the pension rise does not work--it patently does not for older people--perhaps we need to think of another way. Over the years there has been much talk of a pensioner index. Could the Minister ask her officials seriously to consider something that gave greater weighting to council tax, utility costs or transport costs, things which form such a large part of older people's outgoings, or perhaps the link to GDP, which is one idea on which Age Concern published a report a couple of years ago?
	I know that the Minister will refer in her response to the pensioner's credit, which is very good news. It is intended to help those with modest savings and, in particular, those with small occupational pensions, many of whom miss out at the moment. I very much welcome this aim, though I am unsure as to why it cannot be implemented in April 2001. Perhaps the Minister could enlighten me in that respect.
	I, along with the vast majority of Britain's older people, believe that an improved basic pension is the most effective way of achieving the goal. As I said, a higher pension is also the best way to improve the income of the very poorest pensioners; namely, those entitled to income support who do not claim. Finally, a commitment to maintaining and improving the basic pension--if one of those ways could be chosen to do so--would give a firm foundation on which future pensioners could build up a decent income in retirement, together with state second pensions and stakeholder pensions. If we could achieve one of these aims, I think that we could say in this country that there is a standard of living for pensioners which we can, if not take pride in, at least be satisfied is really fair.

Lord Brett: I listened to those who have spoken thus far and some points have been made with which I have more than a little sympathy. I agree with my noble friend Lady Turner. Under our arrangements for capping increases in pensions in relation to private sector schemes, I fail to see how it is possible for pensioners to have done so much better than people on average earnings. I also agree with my noble friend Lady Castle. Many pensioners felt insulted by the 75p increase.
	I was "on the knocker" in local elections, which was not a pleasant experience when I met anyone who was pensionable. However, it was not a case of people saying, "Oh, this should be related to earnings", or, "We don't like it related to prices"; it was simply the fact that the amount of money produced by the formula was deemed to be insulting. That was the real issue, which never got beyond an argument.
	It seems to me that my noble friend Lady Castle was a little unfair in her use of statistics. She did not seem to include other factors that the Government have taken into account during the past three years to assist pensioners; for example, concessionary fares, the change in taxation policy, free eye tests, and so on. Indeed, there is a whole series of things that cannot be left out of the equation.
	Going back some years, I remember when the Secretary of State was my noble friend Lady Castle and the earnings related link was introduced. It made every kind of sense then because at that stage the vast majority of people had no provision other than the state pension. Indeed, it was something like two to one in favour of people having a state pension and only one-third--a minority, a privileged elite--having a scheme that was organised through the employer or in some other way. That situation has just about reversed itself now: 25 years later, we have two-thirds of people in occupational pension schemes.
	We are not looking at pension policy revision for tomorrow; we are doing so for 25 and 30 years hence. Therefore, it would be wrong to ignore those features. In that sense, it is a question of asking ourselves what we will be doing in 30 or 40 years' time in a globalised economy as regards ensuring that everyone has an adequate pension. Therefore, in much of what the Government are seeking to do, I can see that they are endeavouring to protect pensioners with lower incomes. I do not want to get into a rich versus poor argument as regards pensionable income over the past 20 years. But, because we have paid people better at the higher levels of our society than those in basic employment, there has been a much greater extension, a stretching, of pensionable pay between those who are more than adequately pensioned (I include myself among them) to those who have a real need. The question we should be considering is: how can we best assist those in need? It seems to me that we should see such features as the minimum income guarantee, the working families' tax credit and, indeed, a number of these other measures as a package.
	Although I should like to see the satisfaction on many people's faces if we were to restore an earnings link, we must ask ourselves whether that is the best policy in the long term; in other words, is it a policy that we can sustain? Moreover, is it one that the pensioner of 2020 will actually need? All those considerations lead me to believe that, if we were re-inventing pensions, we would not be looking for an earnings link. We would be looking for a portfolio of pensions, somewhat similar to that being put forward now, with a degree of state provision and a greater degree of private provision.

Earl Russell: I wish to add a few points to the debate. First, if the Minister will forgive me, I wish to comment briefly on age-related additions. I want to borrow a point which the Minister herself contributed to our debates a couple of years back. She argued that the extent of poverty on benefit depended in large measure on how long you had been on benefit; that things wore out and they needed to be replaced.
	If you are an 80 year-old pensioner, you have been on benefit for quite a long time. Your overcoat is probably worn out and you probably need new shoes. The carpets are probably threadbare. The car probably needs replacing, if, indeed you can still keep your insurance. You may have costs which are a great deal higher than those of a younger pensioner on the same income.
	The point about the car insurance draws attention to the fact that in many ways older pensioners may have higher costs than younger ones. My father-in-law, to his utter fury, has just had his car insurance withdrawn at the age of 90, although his previous motoring offence was in 1941 when he was discovered to have only one of his headlamps covered with brown paper during the blackout!--which he still wakes up hot at night about. If you lose your car insurance--he fortunately got his back from another firm almost instantly--if you want to shop you have to spend money on taxis. If you want to go to the doctor, you have to get someone else to take you. These things add considerably to costs. Therefore the expense of being an older pensioner may be a great deal greater than the expense of being a younger pensioner on the same income. These things might perhaps be taken into account.
	My second point follows the question of the noble Baroness, Lady Castle of Blackburn: "More than what?" The Minister gave a figure of £6.5 billion more than the previous government. First, is that calculated over three years since the comprehensive spending review, or over five years as the period of the Parliament? Secondly, is it calculated in money terms or in real terms? Thirdly, does it or does it not take account of the £3 billion undershoot in public spending in the first year of this Government? That is £3 billion under the Conservative targets to which they pledged themselves. These things are, I think, material.
	The next matter I want to ask about is the minimum income guarantee in which the Minister has placed a great deal of faith in the course of these exchanges. I am not used to trusting in MIGs so I am perhaps entitled to ask for some clarification. First, what are the means of delivery of the minimum income guarantee? What methods do the Government suggest to ensure that this guarantee is made effective? How is the money to be got to the people who are entitled to it? Secondly, how many people have actually been helped by the minimum income guarantee since this Government first announced it? Is it any more than were getting means-tested help on top of the state pension before the guarantee was announced? In fact, has the minimum income guarantee made any practical difference and, if so, how can we quantify it and how is it visible?
	I have one final point. Like the noble Lord, Lord Brett, I have been listening to voters recently. I know that the points the noble Lord makes about the other things which have been done for pensioners are true. However, these things carry with the voters no weight whatsoever. What is more, they blame not only the government but the whole profession of politics. A great many of them told me not merely that they would not vote for the governing party again but that they would never vote again for any party whatsoever. This is a dangerous disconnection between politicians and public. For good or ill, we live in a democracy. According to The Times today, in some constituencies among those who actually cast their votes as many as one in three may be pensioners. They have, or they did have, a high marginal propensity to vote. So we ignore them at our peril. The Government might be wise to listen. Whatever The Times today may suggest, I do not think that an extra increase next year will come in time. As my honourable friend Mr. Foster once told the then Mr. John Patten, the Minister should not think that jam tomorrow will get them out of a pickle today.

Baroness Hollis of Heigham: The purpose of the amendments is to provide for uprating of the basic retirement pension by at least the growth in general earnings or retail prices--whichever is the greater--during the preceding year. I say more in sorrow than anger to the noble Lord, Lord Goodhart, that I thought that was a valiant rally by the noble Earl, Lord Russell.
	I hoped for a debate in which we could show through information that I could share with the Committee--and information which I imagine the noble Lord would not dream of disputing--that age-related rebates would not serve to reduce poverty in the way that the noble Lord suggested. I take the points about expenditure. We are not arguing that aspect at the moment. Income is the main push, in the sense that there remains greater inequality within each age band rather than between age bands. It is the same problem as more people living in poverty outside poor areas than there are in poor areas.
	The noble Lord admits his proposal is an ineffective way to proceed but says that unless we accept it, he will go for an earnings link--which is something with which he has disagreed for all his time in your Lordships' House. I wonder about the grounds on which the noble Lord can justify pursuing a policy that statistics show will not achieve what he wants.

Earl Russell: The Minister could show that the suggested measure was imprecisely targeted but she could do that with a great many other benefits. There is a case for arguing that imprecise targeting is better than no targeting at all.

Baroness Hollis of Heigham: If only 40 per cent of 80-plus pensioners are on MIG, which is relatively generous in offering high earnings-related sums, the noble Earl would have us target a lot of resources at less than half the population in the age cohort who, as defined by income support eligibility, are not poor. Apart from being imprecise, the benefit would miss 60 per cent of the target.

Lord Goodhart: The logical conclusion of the Minister's argument is that everything would be shifted onto MIG and there would be no basic pension. What is the correct level at which to preserve the value of the basic pension and state second pension? We feel that a proper age addition is required even if it is not targeted as precisely as MIG would be. The fact that 40 per cent of 80-year-olds qualify for MIG is a sign that the pensions of 80-year-olds are too low.

Baroness Hollis of Heigham: Although one would end up with an unacceptable situation--reductio ad absurdum--that is not an assertion that one would go down that path. The more absurd it is, the less likely that is to happen. I do not accept the thin end of the wedge argument.
	Under the proposal, age-related rebates would give money to people who, in the top quintile, are enjoying household incomes of more than £400 per week simply because they are over 80--but would not offer similar support to people under 75 whose income might be one quarter of that sum. That is what I find objectionable about it. It is not that it targets imprecisely; unlike MIG, it does not target at all.
	That is why I find it odd--I shall not put it otherwise--that the noble Earl says that we should go down a path that at best, in his words, targets imprecisely and, on my account, does not target at all. If we do not, he will support something that he has always persistently--and in my view properly--described as "inappropriate"; that is, the earnings link. The noble Earl has ended up in a very odd position: he is saying that we must accept something that does not work, otherwise he will force on us--or seek to force on us through any support that he can give--something that, up to now, he has always said would not work and should not be done. I find that an undesirable position for Front Bench spokesmen to find themselves in. I am happy to give way, if the noble Earl wishes.

Earl Russell: It is only fair that the Minister should have her own proposals subjected to the same scrutiny as ours. No doubt MIG would be precisely targeted if it were ever delivered, but it does not matter how well something is targeted if it is not delivered. What are the means of delivery of MIG?

Baroness Hollis of Heigham: I fully take the noble Earl's point. He is right. My noble friend Lord Brett and other noble Lords have made exactly that point. We know that MIG can identify those most in need and concentrate help on them, but, unless we can deliver the money to them, I agree that it will be ineffective and inappropriate for what we need to do.
	That is why we shall be writing to the 2 million pensioners whom we think are eligible; why we shall promote a massive advertising campaign, both nationally and locally, through Dame Thora Hird; why we shall encourage all the voluntary organisations, from the CABs to local authorities and so on, to work with us in a campaign over the summer; and why we shall spread the information through local housing offices and through leaflets that I hope local authorities will send out. This is to ensure that elderly people are aware that this is their right and their entitlement. To get that right and that entitlement, they can complete the forms in the privacy of their own home. They do not need to go into benefits offices; they do not need to queue; and they do not need to stand in a line with unemployed youngsters in front of them and other people behind them. They can do it all over the telephone in their own home, or in their son's or daughter's homes if their son or daughter is on the phone.
	We have to make sure that people know about MIG; that, once they know about it, they seek to claim it; and that when they seek to claim it, they do so in a way that is as automatic and stigma-free as we can make it. We believe that we have achieved that. As I said, we are working with local authorities, and I have been talking to them; we are working with CABs, and I have been talking to them. I am very happy to take on board any of your Lordships' experiences of even more effective ways of getting automatic delivery. We do not have all the answers on this.
	A year or two down the line, it would be reasonable for noble Lords to hold us to account on how effective we have been in achieving the delivery of MIG to the poorest pensioners, but this is the only way in today's society that we can address need--not by age-related rebates; not by giving more money to women or to single pensioners; not by an earnings link to state pensions. The only way we can really address poverty, target it and ensure that every pound goes to those who need it and not to those who do not, is through the minimum income guarantee. If the noble Earl and other Members of the Committee know of ways of helping us to do that, I shall be delighted to receive help.
	Before I address my noble friend's points about the earnings link, the noble Baroness, Lady Greengross, asked me about the pension being index-linked. There is a pensioners' RPI, which is based on the expenditure habits of the poorest one-third of pensioners. Historically, it has not increased by any more than the main RPI. I do not think there would be any advantage to pensioners in that. We track it, but it makes very little difference.
	The basic issue is whether it is right to go for the earnings link as a way of addressing pensioner poverty. The earnings link was in place for only four years between 1975 and 1979. As my noble friend Lord Brett rightly said, that was at a time when few people had a second pension. Had I been a junior Member of either House back in 1978 and my noble friend was introducing the earnings link combined with SERPS, I would have been cheering her on because, on the facts as they were then, it was a decent and proper response to the situation of pensioner poverty. That is no longer the case. In all honesty, I suggest to my noble friend that she is simply and resolutely refusing to take on board all the changes that have happened to pensioners' income in the last 20 to 25 years. It as though none of the changes that my noble friend Lord Brett mentioned has occurred. They have and we must deal with the world as we find it, not with the world that my friend was dealing with, properly as she did--and I would be one of her greatest fans in that respect--back in 1978. The reason is that over the 20 years or so since then, the impact of SERPS and occupational pensions on pensioners' income has been substantial.
	I repeat, the real growth in average earnings for all of us since 1979 has been 38 per cent. Average pensioner incomes grew from their base by 64 per cent in real terms between 1979 and 1996/97. In other words, pensioner incomes have grown from their base by nearly double the amount of the rest of us from our base. The noble Lord asked, what sort of figures we were talking about in terms of 6.5 billion. It is at today's prices; it is over the whole Parliament; it is calculated on the basis of discretionary policy changes like MIGs, earnings upgrade, winter fuel payment, TV licences, no allowances for forecasting undershoot. I hope that addresses the point that I was asked. It remains the case that many pensioners now have incomes which are substantially above minimum income guarantees.
	Most pensioners are not poor. A few pensioners are rich. A significant number, 20 to 30 per cent, are poor and those are the pensioners who have missed out from the growth in rise of pension incomes that we have seen since 1978, 1979 and onwards. In other words, what we have seen is that the growth in pensioner incomes has widened and there has been more inequality within pensioner incomes, with medium income pensions too, than most of the rest of us have experienced.
	The gap between rich and poor pensioners has increased substantially since 1979. The median net income of the top fifth has grown by 80 per cent. The median net income of the bottom fifth has grown by only 34 per cent. If you take single pensioners, the gap is even wider. For example, 28 per cent for the bottom fifth--much less than for the rest of us--but 76 per cent, much more than double, for the top fifth.
	Faced with that situation, taking single pensioners where the income of the bottom fifth has grown by 28 per cent and the top fifth by 76 per cent, is it right, is it decent and is it proper that the same increase should go to all of them even though some of those pensioners, a fifth, have fallen behind the rest of us proportionately to their base and the top fifth have exceeded the base compared to the rest of us by double? Is it right that we should treat them all the same? Should we give a little to everyone or should we say, what has happened since 1978-79 is that pension incomes have grown substantially for the great majority of pensioners but the 20 to 30 per cent who are on income related benefits have been left behind? I ask my friends in the name of socialism, what should you do? Give a little to everyone, irrespective of their financial need, or concentrate the help on those who need it most.

Baroness Turner of Camden: This is not a charity.

Baroness Hollis of Heigham: No, it is not charity. This is an income related benefit which goes to those who need it and it has come from the rest of us through taxation which is also income related. It is from those of us who can afford to pay through a means-tested tax system to those who need it through a means-tested income support system. I think that is a decent and proper way to help those most in need. Give to those who need it. Not a little to everyone, but focus it on those who need that help who otherwise will linger in poverty. I give way to my noble friend.

Baroness Castle of Blackburn: I think it is a little mean to harangue us when we are not as accustomed, as the Minister is, to jumping up to answer every point as it is made. That reduces a debate in this House to chaos. We shall wait for our next turn, do not worry.

Baroness Hollis of Heigham: As I am sure my noble friend knows, one of the differences between Committee stage and Report stage is that there is a debate and therefore noble Lords may intervene freely. I am disappointed in my noble friend if she feels restrained from doing so on the assumption that this is not Committee stage but Report stage. We have such procedures at Report stage. At the Committee stage we do our best to have a debate and if it is helpful to intervene all of us are happy to give way. That is the difference in the way we handle our procedures in this House compared perhaps with the Commons.
	As I said, some have missed out. Therefore, the Government have a clear choice. There can be a little to everyone, which is what my noble friend is proposing, or, as the Government are doing, a focusing of help on the poorest. My noble friend said--I wrote down her words--that it all depends on who benefits. Yes, precisely. It all depends on who benefits. My noble friend wants Members of your Lordships' House--all of us--to benefit, whether our income is £20,000 or £100,000 a year. Frankly, that is not what I am in the game for. I am in the game for those who do not have those levels of income and who would otherwise be dependent on very low levels of income.
	To increase the basic pension in line with average earnings would cost an extra £1 billion in 2000, an extra £7.5 billion in 2010 and would rise to an extra £24 billion in 2025. My noble friend said that I do not talk figures and that if I did she would respect me. Well, I am telling her now--that is what the cost would be. I am talking figures--an extra £24 billion in 2025. But, more importantly, that would not increase the overall income of the poorest pensioners--it would merely come off their MIG--and it would spend money on the rest of us, who do not need it, to help ourselves in retirement. I say to my noble friend--

Lord Goodhart: The noble Baroness is being extremely eloquent at the moment. How does she think that this will go down with the 80 year-old pensioner on, let us say, £110 a week who says, "Why is it that I am getting nothing whereas someone who has a few pounds a week less than I do is getting the substantial increase from the minimum income guarantee?"?

Baroness Hollis of Heigham: That is a perfectly fair point. That is exactly why we are proposing to introduce a pensioner's credit. It is going out to consultation. We are targeting help on the poorest. We still want to retain the incentive for people to save and to build for their retirement. Therefore, you must not penalise people just above the income receiving limits. The noble Lord is absolutely right. That is why in the Budget the Chancellor raised the capital limits to increase eligibility for MIG and its passported benefits from £3,000 to £8,000 and from to £6,000 to £12,000. That is a substantial increase as they had not been raised since 1988 and 1990 respectively. It is why the Chancellor has taken on board that entirely legitimate criticism that we need also to consider the equivalent of a disregard for modest income--just above the benefit line. That is precisely why the pensioner credit is being developed and will go out to consultation in the usual way. The noble Lord is exactly right.
	To go back to the basic choice facing all of us, if for a poorer couple over 75--people on benefit levels--you linked their pension to earnings, as my noble friend proposes, this year they would get £6. Or you can make them eligible for MIG. That same poorer pensioner couple of 75 would get £18. So £6 or £18? You cannot do it all. You cannot give £18 to everyone. If you give £6 to everyone you still have to help the poorest pensioner more or alternatively they fall behind the rest of us, while others of us enjoy £6 extra that we do not need.
	The basic retirement pension alone cannot provide, and was never intended to provide, a complete income in retirement. It is a key building block and that is why we are uprating it with RPI. We are trying to see this as the first step and then put in place the second tier of the state second pension, the stakeholder or the occupation pension; and for those in the meanwhile who fall between the net, to support them with the minimum income guarantee. Through the minimum income guarantee we increased income support for pensioners last year by three times the rate of inflation. This April it was increased in line with earnings.
	My noble friend Lady Castle said that one in six was currently on MIG and all that would happen under our proposals in 2050 is that one in five would be. I am sorry. She is incorrect on that. One in three pensioners is currently now on MIG and that will fall to one in five as a result of our proposals. If we did not intervene, that one in three would remain. So we are bringing about a substantial improvement in the lot of pensioners--not, as my noble friend argued, a serious deterioration.
	We have not forgotten our manifesto. We are spending £2.05 billion extra on pensioners. They will have, for example, special winter fuel payments. That is a form of hypothecated contribution to fuel costs, because pensioners spend longer at home, they need higher levels of heat, and they are living in houses that are more poorly insulated. We are introducing free television licences, there are free eye tests, as well as tax reductions which mean that two-thirds of pensioners do not pay income tax. As a result, as I have said, an extra £6.5 billion will be spent on pensioner incomes in this Parliament. We are spending £2.05 billion more than would be the cost of uprating the basic state pension in line with earnings, and in an effective and balanced way.
	To put it another way, all pensioner households will enjoy the equivalent of a tax-free £3 per week hypothecated winter fuel allowance, and all pensioner families over 75 will enjoy a free TV licence worth an equivalent of £2 a week, making a tax-free £5 a week. So for all pensioner households over 75 the Government are offering the equivalent of £5 extra tax-free a week. The poorest 30 per cent who are broadly eligible for MIG will, on top, receive a further £10 to £20 a week. In other words, under the earnings-related uprating, the bottom 20 per cent would see their incomes improve by around 15 per cent. Under government policies, their income will improve by double that.
	So we are helping all pensioners with winter fuel, and those over 75 with television licences, by virtually as much as the earnings link would have provided. But for the poorest we are offering double what my noble friend's proposals would offer. That is where the need is. Given everything the Committee knows about what has happened to the growing stretch of pensioner incomes, in which two-thirds of pensioners do not need our help in this way but one-third do, I hope that my noble friends behind me will recognise and respect the fact that what was right in 1978 is not right now, because the world has changed. If we are to meet pensioner poverty, this is the best way forward. I hope that, in the light of my remarks, my noble friend will withdraw her amendment.

Baroness Turner of Camden: I thank my noble friend for her eloquent response to the debate, which has been a very good one. She will not be surprised to learn that I disagree with her. I still believe in the earnings-related concept. My reason is that I am a firm and committed believer in a system of social insurance.
	I interrupted my noble friend to point out that the basic state pension was not a charity. It is not. People have contributed to this pension during their working lives, through the tax system and through national insurance. When they arrive at the age when they are due for retirement, many look to that as a basic building block, as my noble friend rightly says, of pension provision.
	Indeed, my noble friend talks about the basic building block, but that is beginning to crumble, and has been crumbling for some time. It will continue to do so unless the Government do something about improving it. There does not seem to be any indication that they want to do that. The concept is that increased pension provision is paid out only on the basis of people in actual need.
	My noble friend has repeatedly said, as has my noble friend Lord Brett, that we are not in 1978 any more. But since 1978 matters have got rather worse than was intended then. SERPS has been substantially diminished. Moreover, as a result of previous government policies, the numbers of final salary schemes have diminished. Indeed, such schemes have hardly been introduced in the past 20 years. What we have instead are money purchase schemes, with the inevitable lack of security that goes with money purchase provision. That now applies right across the occupational pension scene, instead of the much better final salary provision that existed well before 1978. Things have not improved marvellously since then.
	I have said repeatedly that much occupational pension provision is based on the assumption that it tops up the basic pension. The pension package in 1978 had two tiers: the basic building block, as it has been described, and an occupational pension or SERPS on top. Part of that package, the basic building block, was to be increased in line with the wages index. The failure to do that produces a situation in which even occupational pensioners are not as well off as they expected because the basic pension has not kept pace with the earnings index.
	I thank the noble Baroness, Lady Greengross, for her support. Her observations deserve consideration. Even if this amendment is not accepted I hope that the Government will think very seriously about making a substantial improvement in the basic state pension. As has been pointed out by every noble Lord on this side of the Committee who has spoken this evening, the increase of 75p has resulted in considerable resentment among pensioners which has been made manifest in recent election campaigns. I have a good deal of contact with pensioners. My union has a section for the retired with its own organisation and annual meeting. A large number of people are in receipt of an occupational pension which is not usually generous. The pension has not been increased in line with the wages index. Pensioners are lucky if they have received retail price indexation. Therefore, even though they have an occupational pension the basic state pension is a matter of great concern to them.
	Although I shall not press my amendment at this time of night, I ask the Government to think very seriously about the whole issue of the basic state pension. We have reached a stage where, even if the amendment is not accepted--I remain wedded to the notion of earnings-related indexing--it is essential that the basic state pension is examined carefully in light of very widely expressed dissatisfaction by the electorate who are pensioners. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Castle of Blackburn: had given notice of her intention to move Amendment No. 133:
	After Clause 37, insert the following new clause--
	:TITLE3: ANNUAL UP-RATING OF PENSIONS
	(" . In section 150(2) of the Social Security Administration Act 1992, in paragraph (a), after "beginning" there shall be inserted the words "and, in the case of the weekly rate of the basic pension specified in section 44(4) of the Contributions and Benefits Act and the category B retirement pension specified in Part I of Schedule 4 to that Act, by not less than the percentage by which the general level of earnings is greater at the end of the period than it was at the beginning".").

Baroness Castle of Blackburn: I do not intend to move the amendment for the time being.

[Amendment No. 133 not moved.]
	Clause 38 [Preservation of rights in respect of additional pensions]:
	[Amendment No. 134 not moved.]

Lord Higgins: moved Amendment No. 135:
	Page34, line 22, at end insert--
	(""(4B) The regulations shall be based on the presumption that claimants have received incorrect or incomplete information unless the Secretary of State provides proof that the information the claimant received was correct and complete.").

Lord Higgins: This is a very important amendment which arises from so-called inherited SERPS. We had a Statement on this subject earlier this year. There are other amendments on the same subject in the names of the noble Lord, Lord Rix, and the noble Baroness, Lady Greengross. I concentrate on Amendment No. 135 in my name and those of my noble friends. The amendment provides that the regulations with regard to compensation for inherited SERPS,
	"shall be based on the presumption that claimants have received incorrect or incomplete information unless the Secretary of State provides proof that the information the claimant received was correct and complete".
	When the Statement was made on 15th March, both the noble Lord, Lord Goodhart, and I had difficulty in ascertaining the precise recommendations of the ombudsman on this subject. We quoted paragraphs 32 and 41 of his report, which we understood to be his recommendation to the Government. Unfortunately, the ombudsman decided, strangely, to express his views by reference to a letter that he had written to the Permanent Secretary at the Department of Social Security rather than to recommend in terms that, given the situation, the Government should do this and that.
	On that occasion I asked the Minister:
	"As there is confusion perhaps we could ask the ombudsman what he meant".
	The noble Baroness replied, somewhat unhelpfully, I thought,
	"The noble Lord is entitled to ask the ombudsman whatever he wishes"".--[Official Report, 15/3/00; col. 1617.]
	So I did, and received a courteous reply from the ombudsman.
	I fear that it is still not clear in my mind what he recommends. He seems to feel that he should wait until he receives the detailed eligibility criteria under the scheme and he will then say whether they meet the views he expressed. I always hesitate to criticise officials who cannot answer back, but there again seems a degree of obscurity.
	None the less, crucially, there are two points which anyone claiming that he should be compensated because of the sad history of widows' SERPS needs to establish: first, that he was misled; and, secondly, having been misled he took action, or failed to take action, which resulted in his being unable to make adequate provision for his widow at such time as she became bereaved. My amendment seeks to deal with the first of those propositions; namely, whether it is necessary for anyone claiming compensation to establish that he had been misled.
	On that subject, the ombudsman's views are clear. He says:
	"In the course of my investigations I suggested to the Department that the onus of proof"--
	as to whether one had been misled--
	"was therefore reversed. It was for the Department to prove that someone would have acted differently if they had not been misinformed. It seemed to me that the normal rules of the Department's non-statutory scheme for financial redress for maladministration would be inappropriate".
	He continues in the letter:
	"The presumption had to be that anyone who could reasonably claim to be misled and in consequence to have acted, or failed to act, to their detriment had a prima facie case for redress".
	The situation seems clear. Either people did not read the leaflets, in which case they would have assumed that the entitlement to the widows' pension was unchanged. Alternatively, they read the leaflets, in which case they were misled. Therefore we should not go along the route we discussed last year when debating the matter. We should not ask: did an individual telephone the department on a specific date? What did the department say? Alternatively, did he write to the department and receive the wrong answer? Was he merely having a discussion at the local social security office? For the reason I have stated, that should not be required of someone making a claim for compensation. I hope that that is common ground. While we shall not reach a final decision today, I hope that at later stages the Minister will accept that position, or accept my amendment today.
	The letter continues:
	"The Secretary of State for Social Security has said that he accepts that where there is no documentary evidence it will be for the Department to challenge or disprove a claim".
	That is to say, a claim that the individual was misled. Perhaps the Minister will confirm that that is so. If so, I imagine that she will be able to accept my amendment.
	The second leg of the argument is whether an individual can claim that, as a result of having been misled, he took action which resulted in detriment to him; or did not take action in particular to make provision for a widow's pension. The amendments in the name of the noble Lord, Lord Rix, and the noble Baroness, Lady Greengross, refer to aspects of that problem.
	My impression is that the ombudsman also takes the view that, so far as that is concerned, it is for the department to prove that the individual concerned took some action which protected the position of his widow. I am not entirely clear about that. I shall listen with interest to what the Minister says at this stage in the proceedings. However, so far as concerns the first point, it seems to me that my amendment is very important. I hope that, even at this stage, the Minister can accept it. However, no doubt we shall not reach the final conclusion this evening and shall have to see how we proceed at later stages.
	This is a long and sorry tale. It is maladministration on a totally unprecedented scale and, as a House, we need to put the matter right. I am bound to say that the Government have not been unforthcoming on this matter. None the less, it seems to me that the details need to be spelt out in primary legislation. That is why my amendment is worded in the way that it is. I do not believe that it would be satisfactory to leave the matter to regulations at a later stage. That may have been appropriate earlier. However, I believe that by Report stage or, at any rate, Third Reading, we need to be absolutely clear about exactly what the Government propose and, if necessary, vote to establish the right position. I beg to move.

Lord Rix: At the Second Reading of this Bill, I said that I would be putting forward a simple amendment to address the ambiguities inherent in Clause 38 as at present it appears on the face of the Bill. Other Members of the Committee have had the same notion and we are now presented with three further options for change and, may I say, improvement. Therefore, I hope that the eventual outcome will be something better than the Government's proposals, welcome though those proposals are.
	The amendment of the noble Lord, Lord Higgins, which he explained so clearly to the Committee, reverses the burden of proof as regards information received, although not as regards action taken. It requires the Secretary of State to show that his department provided the kind of information which, we know, in general it failed to provide. My noble friend Lady Greengross, whose amendment follows mine, takes certain key categories of likely sufferers from duff information, or no information at all, and protects their survivors without any requirement to claim under the compensation scheme. In other respects, her amendment and mine are very much alike. That reflects a unanimity of purpose, if not of belief, as to how far the Government may be persuaded to go.
	According to this morning's edition of The Times--we have already heard this article quoted by the noble Earl, Lord Russell--the former deputy Labour leader of Plymouth Council, David Millar, blamed his loss of office as a result of the recent local elections by saying:
	"If there was one single issue which did us more harm than any other it was pensions".
	As we all know, SERPS is described as an "additional pension", and any confused, retired pensioners who are worried about their surviving spouse's inherited benefits must surely be included among those absentee voters. My amendment both helps the Government out of that particular hole (dug, I may say, by an earlier administration) and operates within the compass of the Government's compensation scheme. However, it reverses the burden of proof--and here it differs from the amendment of the noble Lord, Lord Higgins--for those most likely to have suffered irremediable disadvantage.
	I am seeking to write on the face of the Bill necessary concessions which the Government might be minded to put into regulations under the broad and non-specific powers of Clause 38(5). The history of the amputation of SERPS rights is such that I make no apology for opting for a little more certainty and a little less trust. We all remember Virgil's stricture about,
	"fearing the Greeks even when they bring gifts",
	or Juvenal's question:
	"Who is to guard the guards themselves?".
	Such classic doubts could be put to rest by the adoption of my amendment, which is supported also by the noble Lord, Lord Goodhart, and my noble friend Lady Greengross, for I believe that it encompasses reasonable simplicity and relative justice.
	An injustice having been done, and, to their great credit, recognised by this Government, that injustice needs to be remedied. I believe that my amendment has the virtue of providing that those who have most palpably suffered injustice do not have to stretch their memories, and perhaps their imaginations, in order to reclaim justice.

Baroness Greengross: My Lords, as my noble friend Lord Rix has said, a number of options are now before this House. Although different, each seeks to find a better solution to the inherited SERPS problem than the proposals put forward by the Government. I rise to speak to my amendment, No. 139, but I would also wish to refer to the other amendments tabled by noble Lords.
	The proposed protected rights scheme has few supporters. While we welcome the seriousness with which the Government have treated this very big problem, including delaying the change to October 2002, I wonder whether the protected scheme will work. I understand that in another place both the Public Accounts Committee and the Public Administration Select Committee have expressed grave reservations on its practical operation.
	At Second Reading I raised some of my concerns regarding the need to make an application to the scheme and the information people will have to provide. I see two key problems. First, many people who contact Age Concern and other organisations echo the statement of one man who wrote:
	"I was not misinformed. I was not informed. How will I be able to present my case".
	I gather that the Secretary of State has admitted that in future better information will have to be given when changes are made to state pensions, as finally government have recognised that changes to pensions law are different from most other changes to law, which do not involve planning for one's retirement income.
	Although the Minister said that the Government have no legal obligation to tell people of changes, surely the solution should take into account the moral obligation. I might add that, as the Minister knows, we have sought alternative legal advice that is contrary to hers. I believe that the Government did have an obligation to inform SERPS contributors, especially those who had paid into SERPS before the law changed in 1986 and 1995, of the changes made.
	Secondly, as the chairman of the Public Accounts Committee, David Davis, said in another place, the protected rights scheme as announced could be good for the dishonest and bad for the honest. Others have suggested that a cottage industry is going to develop to show people how to claim successfully, which might put the cost to the Government much much higher. This puts responsible organisations in an invidious position. We would of course provide information about making a claim but would never urge people to be dishonest.
	But what message does this send out to older people, especially to today's older wartime generation? Someone is going to suggest before long a campaign called "Lie before you die". This whole sorry story has been dubbed in the media as the "SERPS mis-selling scandal". Many people have contrasted the way that private companies have been obliged to seek out people who may have been mis-sold a personal pension. Therefore, I still believe that the simplest and fairest way to deal with this problem would be to abandon the change altogether for SERPS contributors. This is the only way to reassure everyone who paid contributions in the expectation that their spouse, if widowed, would inherit their full SERPS.
	I support the amendment in the name of the noble Baroness, Lady Castle. I am also attracted by the ingenious amendment in the name of the noble Lord, Lord Higgins, although it does not necessarily protect those who are already or almost retired.
	It is in a spirit of compromise that I have put forward my amendment, which is fairly modest. It falls short of reversing the change but aims to ensure that the reduction will not apply to the widow or widower of certain people who would now find it difficult or impossible to make alternative arrangements.
	Like my noble friend Lord Rix, I wish in particular to protect those who will have already reached pension age or who will have retired due to ill health on 6th October 2002 and people for whom a claim to the protected rights scheme would be impossible due to mental disability. Others, such as younger people who have been misinformed, would still need to rely on the protected rights scheme for protection, which would become a much smaller and more robust scheme and far less costly.
	It is likely that a major reason for the Government not going further in addressing this problem is the potential cost. But the cost of the two-and-a-half-year delay and the current protected rights scheme is estimated at £8.2 billion if there are successful claims covering 30 per cent of expenditure. If 50 per cent successfully claim, then the cost will be another £3.8 billion.
	However, the costs must not be overemphasised, nor should we be confused by them. The figures are spread over a 50-year period. When else is expenditure totalled up over such a long period? The £10 Christmas bonus costs the Government around £100 million per year in today's prices. Over 50 years, that is £5 billion. Are we suggesting that that is too much? Far from it: most older people rightly say it is not enough. The winter fuel payment is now £150, at a cost to the Government of some £1.25 billion per year. Over the next 50 years that is £85 billion.
	It might be expected that exempting certain groups, including all over pension age, would increase costs considerably. Yet in another place the Minister stated that the cost of exempting all who had reached pension age by April 2000 would cost £7.1 billion. While my amendment covers more people and would therefore involve somewhat higher expenditure, above all it must be remembered that what is described as a "cost" must also be considered in terms of the losses that individual older widows and widowers would otherwise face. It is not the Government who lose but future widows.
	In effect, I think that both the amendment in the name of my noble friend Lord Rix and my amendment spend the £8.2 billion which the Government think they might have to spend over the next 50 years in a far more sensible way. My amendment differs from that of my noble friend in that none of the categories I list would have to claim to the protected rights scheme. They would be automatically exempted. But either amendment would greatly lessen the worry and potential financial losses of many older people and would lighten the administrative burden on the DSS by reducing the numbers needed to apply to a protected rights scheme.

Lord Goodhart: In the other place, the representatives of my party moved an amendment to require the Government to pay out to everybody who has retired by 5th April of this year a full widow's SERPS and with a phased reduction for those who are retiring at a later date.
	In your Lordships' House, we have not tabled our own amendment. That is in recognition of the fact that the noble Lord, Lord Rix, led the battle over the inherited SERPS rights last year in the debate on the Welfare Reform and Pensions Bill and we thought that, in tribute to him, he should continue to lead the battle in your Lordships' House.
	That said, it seems to me that there is a strong case indeed for the Government to do a good deal more than they have already done or have undertaken to do. As regards the burden of proof on being misled, the noble Baroness, Lady Greengross, was right to say that in this case there was an absolute duty on the Government--more on the previous government than on the present one as most of the time concerned was during the period of office of the previous government--to disclose the change in SERPS. Therefore, the absence of information is, in itself, misleading. It should not in any way be necessary to show that anybody asked for information and was given misleading information.
	Inevitably, the Government must accept that virtually everybody in this country was misled in the sense of not being informed of the 50 per cent reduction in widows' SERPS. Therefore, there can be no question of the burden of proof resting anywhere but on the Government.
	Perhaps slightly more difficult is the burden of proof on the question, "If you were misled, did that make any difference to what you would have done, or would it have made no difference to you if you had known that if you had died after April 2000, your widow's SERPS would be reduced?" I imagine that in the great majority of cases, the only honest answer would be, "I don't really know. This happened some years ago. I never really thought of the matter at the time. I can guess what I might have done but I really cannot say anything definite".
	To require people to prove that they acted to the detriment of the future of their spouse because of the misleading information they received or failed to receive would be, in effect, a cheat's charter. It would open the whole field to dishonesty and to those who say, "Yes, I definitely would have done something different. I would have made better provision for my widow than I did". There would be no way to disprove that. They are the people who will do well out of this. In some cases, that may be correct. I believe that in the great majority of cases, it probably will not be. But for the people who are honest and say, "I can't say that I would have done something different. I might have done; I really don't know", if the burden of proof is on them, they would get nothing.
	Ultimately, if one is to be fair, one has to go down the line of saying that everybody who is not now in a position to see that their surviving spouse is adequately provided for will not suffer from the spouse reduction. The only fair thing to do would be for the Government to accept that as the general position and act accordingly. I know that it will be expensive. However, in fairness to people who have been the victim of this problem, it is the only thing to be done.

Lord Higgins: I thank the noble Lord for allowing me to intervene. It would seem that the ombudsman is of the view that the burden of proof is reversed both as regards whether people were misled and whether they lost out as a result of that. Again, perhaps I may quote from the letter which I believe is not out of context:
	"It was for the Department to prove that someone would not have acted differently if they had not been misinformed".
	The ombudsman appears to take both points.

Lord Goodhart: I am grateful to the noble Lord, Lord Higgins. I would strongly support his proposals, as I support the proposals of the amendments to which I have added my name. I hope that the Government will move further on this, at least in the sense of telling us what will be laid down in the regulations and that those regulations will recognise that the burden of proof on either issue cannot fairly rest on those who wish to claim.

Baroness Hollis of Heigham: All these amendments refer to the proposals made by the Government to address the problems of inherited SERPS, both for widows and widowers, and of course a problem that has also been inherited by the Government. We have debated this subject before and, once the regulations have been drafted, no doubt we shall debate it again.
	Perhaps I may deal first with Amendment No. 124 which seeks to overturn completely the change that would halve the amount of SERPS that can be inherited. We believe the policy to be essentially sound, bringing state provision more closely into line with that required of private pension schemes. Our clearly stated aim for pensions is to reverse the current position where 60 per cent of expenditure is provided by the state and 40 per cent by the private sector. It would not be in keeping with that aim to create incentives to stay in the state scheme.
	The cost of not implementing the change is estimated to be £23 billion over a 50-year period. The sums are enormous. That would represent a huge burden for future contributors on expenditure that is not well targeted as the poorest widowed pensioners would see no gain at all.

Lord Higgins: The figure mentioned by the noble Baroness is almost exactly the same as that for the proceeds from the mobile phone licences, only that receipt was instantaneous rather than spread over 50 years.

Baroness Hollis of Heigham: It is also almost the same, although not quite the same, as the sum spent on retirement pensions and SERPS put together, which runs at a little over £32 billion. In terms of proportion, over 50 years this amendment would almost double the sum of money spent on pensions. That puts into proportion what it will cost to rectify a mistake that we inherited.

Earl Russell: Can the Minister tell us when was the last time she heard a Minister calculate expenditure over 50 years?

Baroness Hollis of Heigham: I believe that happened on the last occasion that I made a speech on this subject. However, whether that speech was made on this Bill or on a Statement, I should not like to say.
	The inherited SERPS figures are discounted over 50 years; namely, they return to today's prices. However, the effect over 50 years seemed to be the most helpful way of passing the information to noble Lords. It is a huge burden for future contributors and it is not well targeted.
	Furthermore, those people who did receive the correct information and have spent money buying alternative arrangements would rightly feel aggrieved if it turned out that they need not have done so. As we have said on previous occasions, the change to 50 per cent inheritance will happen, but not until October 2002. People who have been mis-advised will be able to apply to the inherited SERPS scheme for further protection. Those who have not been mis-advised will have two and a half years in which to reconsider their financial arrangements. We think that the scheme we have proposed represents a fair balance between the interests of pensioners and contributors.

Lord Rix: I am grateful to the noble Baroness for giving way. Can she explain the position for those who are retired and unable to make what is considered to be a legitimate claim, who have received no information and who have made no alternative arrangements? How can they do so between now and October 2002 if they are already retired? Obviously, the majority of them will have no capital available with which to buy extra insurance.

Baroness Hollis of Heigham: I hope to deal with that. If those pensioners--I am now anticipating what I was about to go on to say--received information that was incorrect and would have done something different, then their rights will continue to be protected. If they received the correct information and did something about it as a result, they would not need any action to follow. What is being proposed is a broad-brush solution which will benefit those who have already taken some protection and not actually help the poorest pensioners who would still have recourse to MIG.
	But let me continue, and, if the noble Lord is not satisfied with my reply, by all means he can come back to me or invite me to write to him.
	We repeated in March the Government's Statement about inherited SERPS. In the subsequent debate, the noble Lord, Lord Higgins, was quick to highlight the issue of where the burden of proof should lie in a person's application for redress under the scheme. Along with the ombudsman, he urged that it should lie with the department. The noble Lord, Lord Goodhart, then followed, quoting from the ombudsman's report and urging the Government to accept that people who took no action and who would have difficulty in demonstrating that they would have acted differently if correctly advised, should be catered for under the scheme.
	The amendments reflect both those points but I hope Members of the Committee will agree with me that they are largely unnecessary. Let me refer the Committee to words used both in another place and by myself in the Statement to this House:
	"I intend to accept all the recommendations made by the NAO and the ombudsman".
	That means--and I cannot be clearer than this--that the Government accept that the burden of proof lies with the department. We also accept the ombudsman's point that the inherited SERPS scheme must be capable of a global solution--the noble Lord pressed me on that fairly recently in this Chamber--which includes providing redress to those who were misled and who took no action as a result.
	The noble Lord, Lord Higgins, said that the ombudsman said that the department must prove that the individual was misled. Not quite. The ombudsman said that the burden of proof on the department would mean that, where an individual maintained that he had been misled, it would be for the department to produce proof to the contrary. I suggest it would be wrong not to expect people to answer any questions about the nature of the advice they received. However, I repeat that the Government accept that the burden of proof lies with the department.
	Amendment No. 135 would require us to presume that all applicants under the scheme received incorrect or incomplete information. It does not allow for the situation which I have already bounced to and fro with the noble Lord, Lord Rix; that is, a situation in which a person neither received nor requested any information.
	Amendment No. 138 takes a similar line, but only in respect of certain groups of people--those who are already pensioners or incapable of work when the change is due to take effect in October 2002, and those who are unable to pursue a claim under the inherited SERPS scheme because of mental disability. Everyone potentially affected would still have to apply to the scheme, but only those contributors of working age who are fully fit would have to satisfy the criteria for the scheme as intended. Amendment No. 139 goes even further and automatically exempts the spouses of all those in the same specified groups from the change in the rules.
	It is the Government's wish to provide redress to those who were misinformed. In other words, the protected rights scheme rights the wrong that was done to people from 1988 onwards. It does not right a different wrong; that people would like to have 100 per cent pensions even though in fact all private schemes are 50 per cent. It does not right the wrong that they were in ignorance of the law because in all areas of life people may be in ignorance of the law and that is no excuse. It rights the wrong that people were given misleading advice and as a result either did, or might have, acted to their detriment or failed to act to correct that problem.
	We simply cannot accept that those who were not misinformed because they never asked for any information should be included. That is tantamount to saying that any citizen claiming ignorance of any new law should be given exemption from it. That clearly cannot be right, whether it is about the law on seatbelts, which are now compulsory, including rear seat belts, TV licences or the like. We have to make the assumption for all of us that ignorance is no excuse in terms of an apology for failing to observe the law. We expect that to be a general convention in our behaviour.
	I take the point that we want people to be aware of policy changes, particularly on pensions because it is a long-term investment. And at some point in the future we hope to be able to send people a regular statement of their likely state pension entitlement on retirement, and we could look at the possibility of including information about future policy changes with such statements. We have no wish to withhold information from people, but we are not liable if, in that sense, people have not familiarised themselves with it.
	I have already repeated the Government's acceptance of the recommendations made by the NAO and the ombudsman. In addition, I can reassure noble Lords that the department will be consulting widely on how to bring them into effect. We have already begun that process and, through that, I am aware of the proposals made by the noble Baroness, Lady Greengross, and the noble Lord, Lord Rix, concerning people who will be unable to pursue a claim to the scheme because of mental disability. We intend that the appointee procedures that apply to benefit claims where a person cannot act for himself or herself will be a feature of the scheme. However, in this situation, I can appreciate that a successful claim will turn on past events and so appointee action may be limited.
	I have, therefore, agreed to look carefully into the problem for the regulations. I am grateful to noble Lords for their assistance in this respect. We shall be putting the resulting regulations before the Social Security Advisory Committee, the Public Administration Select Committee and the ombudsman, to name but three. Then, as a final stage, they will come before both Houses of Parliament, where they will need noble Lords' approval. So never will regulations have been scrutinised by so many for the benefit of even more people.
	The inherited SERPS scheme must and will provide redress to individuals who have received incorrect or incomplete information and relied upon it. The regulations which establish it will be extensively consulted on and debated. But the kernel of the problems of the inherited SERPS scheme was misinformation by the department: for that, the department is to blame. That is why our solution addresses that problem. Those who were misinformed and who suffered, or might have suffered, a loss will have their former rights fully protected. On that basis, I urge noble Lords to withdraw their amendments.

Lord Rix: Perhaps I may ask the Minister to explain what she means by "incomplete information". I am not quite sure what it means. For example, does it mean that the phone went dead in the middle of the conversation? Alternatively, does it mean that the typewriter ribbon ran out? I am not quite certain as to the meaning of the phrase "incomplete information".

Baroness Hollis of Heigham: I have to say that I have not, in my own mind, gone into such mechanistic versions of what the phrase might mean. However, I think it means that the information was not sufficiently full to allow someone to make an informed decision. It is too late at night for me to think of an obvious example but, let us say, if someone received information which said, "Yes, you will be getting half a widow's pension", but did not give any indication as to when that might take effect, thus causing the person to believe that it would be 25 rather than 14 years on, that might be the sort of circumstance envisaged here. In other words, what was said was not untruthful but, by its lack of completeness, it did not give a full picture on the basis of which people could make a reasonable decision. If I have unintentionally misled the noble Lord, I will of course give him some further examples. But that is the sort of thing that I believe is meant by the phrase rather than situations involving typewriters and phones.

Lord Rix: I have one other example for the Minister. If someone looked through the leaflet that is issued every year with the pension statement and, up to 1996, that presented no alternative--no change--to SERPS, could that not be construed as "incomplete information"?

Baroness Hollis of Heigham: If, for example, someone received a leaflet in 1996 which clearly led him to believe that, as a result, he would continue to enjoy 100 per cent SERPS pension, that would be inaccurate, incomplete or misleading--however you may wish to describe it.

Lord Higgins: In the light of the Minister's response, I am absolutely clear in one respect; namely, that to deal with this matter by regulations would not be a satisfactory arrangement because regulations are not amendable. Indeed, this place may well take a different view from the view which the Government eventually feel they want to take. Given the scale of the problem and the public interest in it, it would not be right to say that the matter will be dealt with by regulation, where it is a take-it-or-leave-it situation.

Baroness Hollis of Heigham: As draft regulations, so to speak, they would be going before the Social Security Advisory Committee, the Public Administration Select Committee and the ombudsman. If points were made by those three separate bodies that ought to be borne in mind, the regulations would be modified before they came to this as well as the other place.

Lord Higgins: It does not necessarily follow that the Government will accept all the recommendations that those bodies make--

Baroness Hollis of Heigham: They may disagree.

Lord Higgins: Indeed, they may disagree. In my view, it is for this Chamber and the other place to decide the appropriate way to handle the matter.
	I turn to my other point. My amendment--I believe that it helps those who have already retired as well as others--seeks to move the burden of proof on to the Government. I thought that that was accepted by the Government. However, that burden of proof does not constitute simply a case of being rung up on the wrong day or being sent the incorrect letter, or whatever it may be. The starting point--this is my understanding of the ombudsman's position--is that men were told that their wives would receive a full widow's pension. Unless they were subsequently told that that was not the position, they were misled. There was another category of people who were, so to speak, specifically misled. To say that it is a case of ignorance of the law when people are told one thing, the law changes and they assume that the original situation still exists, is to stretch the point too far.
	However, no doubt we shall read carefully what the Minister has said and return to this matter at successive stages of the Bill. However, it is a matter on which Members will need to exercise a degree of discretion. I hope that rather than deal with the matter in regulations the Government will include it on the face of the Bill. We can then consider whether to accept it in that form.

Baroness Hollis of Heigham: What does the noble Lord mean by putting it on the face of the Bill? We are still in the process of consultation. Is the noble Lord saying that we should not continue to consult but should include the measure on the face of the Bill even though we do not expect to see the introduction of the scheme for two-and-a-half years and even though the consultation is extensive and detailed and, as a result, we shall need to put proposals to the other bodies involved? I do not understand where the noble Lord is coming from. Is he saying that there should be a separate Bill or is he saying that the measure should be included in this Bill?--because, if so, it is a case of saying goodbye to consultation now.

Lord Higgins: This matter has been going on for a long while. Last year we had another Bill. I believe that the views of the House were clear. We were told that the measure would be dealt with in this Bill, which it is. However, the crucial point is that at the end of the day the House should be able to amend measures. It is not acceptable that the matter should be dealt with by regulations. It needs to be dealt with by primary legislation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 136 to 139 not moved.]
	Clause 38 agreed to.
	Clause 39 [Home responsibilities protection]:
	[Amendment No. 140 not moved.]
	Clause 39 agreed to.
	Clauses 40 and 41 agreed to.
	[Amendments Nos. 141 and 142 not moved.]

Lord Astor of Hever: moved Amendment No. 142A:
	After Clause 41, insert the following new clause--
	:TITLE3:CONCURRENT HOLDING OF PENSIONS
	(" . A person shall be able to hold both a stakeholder pension and an occupational pension concurrently and without financial penalty.").

Lord Astor of Hever: This amendment would introduce concurrent scheme membership of stakeholder pension schemes and also all forms of occupational and individual pension schemes. The Government have already announced that they will permit individuals to contribute both to a stakeholder pension scheme and to a money purchase occupational scheme which opts to be covered by the new unified defined contributions regime. An individual will be able to contribute up to £3,600 in total to such schemes irrespective of level of earnings. Over earnings of £3,600, existing limits will apply.
	However, many experts in the pensions industry argue that concurrency is vital. Indeed, it is widely considered to be the most important pensions issue at present. If concurrency were to be accepted, it would transform the whole pensions world for the better. These experts believe that members of all occupational pensions schemes should be able at the same time to contribute to a stakeholder pension or to a personal pension, as this would have a number of important benefits for pension provision in the United Kingdom. It would simplify the increasingly complex framework of pension provision, which works against the best interests of people joining pensions schemes. We are convinced that further simplification of the pension regime is vital, as many people have a limited understanding of pensions and may make inadequate provision.
	The introduction of concurrent scheme membership would have the important benefit of enabling individuals to use their stakeholder pension as an additional voluntary contribution vehicle if they belong to an occupational pension scheme. It would increase the likely take-up of stakeholder pensions, so the cost of provision may be reduced. Concurrency would also avoid the possibility of another pension mis-selling or mis-buying scandal. There would be less risk that individuals would remain in a stakeholder pension rather than choose simply to join their employer's occupational pension scheme.
	If the Government are serious about supporting occupational pension schemes, this is an important and tangible way of demonstrating their seriousness. The Government have hinted that they wish to address the issue. If so, could the Minister be more specific tonight, because companies will have to plan ahead? I urge the Government to reconsider concurrency, so that as many people as possible take up as much of their pension entitlement as they can. I beg to move.

Lord Goodhart: It is obviously much easier to combine a stakeholder pension with a money purchase scheme--whether it is an occupational or personal pension. The fact that there may be difficulty, in respect of the rules, in combining a stakeholder pension with a final salary occupational scheme is no reason for not changing the rules to make that possible.
	Stakeholder pensions are of considerable benefit to many employees. It would be of great advantage if employees would not be required to give up their stakeholder pension simply because they move to a company with an occupational scheme. Equally, it would be highly undesirable if they came under pressure to opt out of an employer's occupational scheme to preserve their stakeholder pension. Concurrency is of considerable importance.
	I agree with everything that the noble Lord said about the desirability of encouraging people to maximise their pensions within the permissible limits.

Baroness Turner of Camden: I am inclined to agree with what has been said by both noble Lords. The proposal would involve a kind of AVC scheme. I agree that people should be encouraged to maximise their pension provision. People move in and out of employment. They may spend some time in an occupational scheme but want to switch to a stakeholder scheme. If they could have both, that would simplify matters for them. This is a sensible proposal and I hope that the Government will be prepared to consider it.

Baroness Hollis of Heigham: The amendment seeks to permit concurrent membership of an occupational scheme and stakeholder pension scheme, thus enabling individuals to make tax-privileged contributions to each scheme at the same time. We have already announced our intention to permit simultaneous membership of stakeholder and money purchase arrangements. An individual will be able to contribute within existing limits to both an employer-run money purchase scheme and a stakeholder pension scheme. This new clause would take that a step further and allow concurrent membership of a defined benefit scheme, a final salary scheme, and a stakeholder pension scheme.
	I have some sympathy with the points raised, as my noble friend said, but we need to consider whether allowing a person to make extra contributions of up to £3,600 per year into a stakeholder scheme when they may already be making the maximum permitted tax-privileged contributions into their employer's scheme, really represents the best use of public money. If such full concurrency were to be permitted, we estimate that this would cost the taxpayer around £400 million a year, much of which--if not most of which--would go to those who are already building up large pension rights through defined benefit schemes.
	However, we have not ruled out allowing people on low or modest earnings--many of whom do not in any case make full use of the contribution limits for their employer's scheme (in other words, where there is "headroom")--to make further concurrent contributions into a stakeholder scheme. This is a so-called "partial concurrency".
	Under the existing system, members of an employer's defined benefit scheme can make additional AVCs on a money purchase basis to a separate AVC fund. Various checks have to be carried out, however, to estimate how much can be contributed to the AVC fund without risking the eventual aggregate pension benefits exceeding the defined benefit tax limits. These procedures cause extra administrative effort and expense for schemes, but it is difficult to avoid this entirely when applying aggregate limits to pension rights accruing under the two different principles, defined benefit and money purchase.
	I had exactly this problem when I came with a modest defined benefit scheme from my university and I was entitled to join a scheme here. I should emphasise to the Committee that the work required in the pensions department in order to calculate the headroom and what I might be allowed to pay in AVCs to top it up, was extraordinarily complex and very complicated.
	The pensions industry has told us that a partial concurrency scheme based on estimating headroom, operating in a similar way to the current AVC arrangements, would seriously jeopardise its ability to develop good value stakeholder pensions within the 1 per cent cost limit. In other words, it is the pensions industry which is saying that it has real worries about some of the proposals mentioned today.
	I accept many of the arguments made today. We are therefore keen to find a way forward which will accept partial concurrency without imposing significant administrative burdens on schemes, which the industry itself is worried about. We are currently consulting with the industry to find a practicable system which will achieve this.
	To summarise, we estimate that full concurrency would cost around £400 million in extra tax relief, much of which would go to high earners who are already contributing to defined benefit schemes at the maximum allowable level. I cannot believe that the noble Lord is asking us to allow, effectively, a £400 million increase for those already endowed with good pension schemes.
	We have, however, already signalled our willingness to allow partial concurrency, as long as this can be done in a way which will avoid the imposition of unacceptable administrative burdens, and therefore costs, on schemes. We are working with the pensions industry to achieve this.
	I hope that the Committee will agree that we are working with the industry and trying to meet the substance of what the noble Lord has said. Obviously, we shall come forward with proposals in due course--should we be able to deliver them--in consultation with the industry. I hope that the noble Lord will withdraw his amendment.

Lord Astor of Hever: I am grateful to the noble Baroness for her response. I am also grateful to the noble Lord, Lord Goodhart, and the noble Baroness, Lady Turner, for their support. I am disappointed with the Minister's response. Certainly from my discussions with the industry I have gained a very different impression from hers. I think that the industry would dispute her figures.
	There has been so much debate on concurrency that one would have thought that the Government would have by now reached a final conclusion. Many companies are reviewing their pension arrangements in the light of the introduction of both stakeholder pensions and the state second pension. There are many arguments in favour of this; it would simplify the pensions regime. Despite what the Minister said, the industry is behind us and, I believe, so is the Committee. Accordingly, I should like to test the opinion of the Committee.

On Question, Whether the said amendment (No. 142A) shall be agreed to?
	Their Lordships divided: Contents, 22; Not-Contents, 11.

Resolved in the affirmative, and amendment agreed to accordingly.
	[Amendment No. 143 not moved.]
	Clause 42 [Member-nominated trustees]:

Baroness Turner of Camden: moved Amendment No. 144:
	Page 38, line 23, at end insert ("; and
	(c) in paragraph (a), after the words "are made," there shall be inserted--
	"(aa) that in the case of schemes which fall in a prescribed class, that such arrangements for the selection of persons nominated by pensioner members and deferred members of the scheme to be trustees of the scheme as are required by this section are made,"").

Baroness Turner of Camden: We now enter an entirely different territory, that concerned with trustees. The intention of this amendment is to impose a requirement to have pensioner nominated trustees in larger, more mature schemes, leaving the definition of the schemes to which this requirement will apply to be prescribed in regulations. The nominations are to be drawn from all former members.
	It must be said that whenever one meets pensioners, as I frequently do since my union, as I have said before, has a retired members section which holds an annual meeting, the absence of pensioner members among trustees causes a great deal of resentment. Of course, decisions can be taken by people in employment, but they can be to the disadvantage of those who have left but who have nevertheless contributed, sometimes for a working lifetime, to the fund.
	It has been argued that pensioner trustees would not be representative of, or accountable to, pensioner members given the absence in the majority of cases of any organised pensioner body. However, there are large companies, and I am well aware of some, where retired members do keep in touch with their former company. Sometimes there is an organisational structure for them to do so.
	Nothing will give more encouragement to the formation of pensioner bodies of that kind than giving them a focus and purpose and recognising their legitimate interest in the governance of schemes. This is a reasonable suggestion. I hope that the Government will be prepared to look upon it with favour. I beg to move.

Lord Goodhart: I rise to support Amendment No. 144 and to speak to Amendments Nos. 148 and 152 standing in my name and that of my noble friend Lord Russell. I must apologise for an error in Amendment No. 152. Line 3 refers to "trustee" when it should refer to "director".
	I believe that, wherever possible, both active and pensioner members should be represented on a board of trustees or on a board of directors of the trustee company. Current employees and pensioners have different interests. At its simplest, for example, employees have an interest in the continuance of the company that employs them, whereas pensioners do not--assuming, as is usually the case, that the pension fund is properly funded. Employees might, therefore, accept steps to save the company from liquidation at the cost of some damage to the pension scheme. Pensioners would have no such interest. Again, pensioners might want a more cautious investment policy than current members. I do not say that in taking those decisions the pensioners would necessarily be right, but the arguments need to be presented on their behalf. Therefore, I believe that they need separate representation.
	The Government have said that a specific pensioner trustee or a specific employee trustee would regard himself or herself as a speaker for his or her constituency. But if that was a ground for refusing separate constituencies for employees and for pensioners, why have member nominated trustees at all, since the constituency differences between employer and member nominated trustees are much greater than between employee and pensioner trustees?
	In those circumstances, I am happy to support the amendment moved by the noble Baroness, Lady Turner, and I commend my amendment to the Committee.

Lord Hoyle: I rise briefly to support the amendment, which stands in my name as well as that of my noble friend Lady Turner of Camden. I do so because, as she rightly said, there is a strong feeling among retired people who have contributed to a pension all their life that they also want to be represented in order to safeguard their pension interest. As a member of MSF, I have received a large number of letters from other members signalling the need for that, and also from members of other pension funds. As has rightly been said, there is an attempt on the part of some large companies to keep in touch with pensioners so that they are aware of what is going on. It would be even better if they were represented on the boards of the pension funds. As has been pointed out, their interests may not be the same as those of other members, but their interest is to ensure a valid pension and adequate funds to pay not only their pensions but the pensions of those who will benefit in the future.

Baroness Hollis of Heigham: The combined effects of Amendments Nos. 144 and 147 would be to provide for an additional member-nominated trustee in prescribed schemas over and above the minimum one-third to be nominated by the pensioner and deferred members. Similarly, Amendments Nos. 148 and 152 would mean that schemes with at least two member-nominated trustees or directors must have one who is appointed by active members and one appointed by pensioner members. Currently, schemes with a minimum of 100 members must have at least two member-nominated trustees. Schemes with fewer than 100 members need have only one. In both cases, the scheme is subject to the requirement that at least one-third of the trustees are nominated by members. The revised provisions do not change this.
	It may be helpful if I explain how we see the new provisions working and why they are devised as they are. First and most importantly, the new provisions will ensure that there are member-nominated trustees or directors in every scheme. Our most important priority is to get members on to boards. Beyond that, we are also mindful of concerns that the present legislation is too complex and difficult to operate. Equally, we have to consider the costs associated with forcing schemes to change their existing arrangements.
	To satisfy the new requirements there will be two routes, which for convenience we have labelled the "trustee route" and the "employer route". Under the trustee route, trustees will implement nomination and selection procedures using a framework set out in regulations. They will have some flexibility; for example, they can divide the membership into constituencies and there will be scope to use selection panels and so on. All active, deferred and pensioner members will be free to stand for selection. All active and pensioner members, and such deferred members as the trustees decide to include, will have to be invited to make nominations. The statutory framework will ensure that members are treated fairly. Therefore, unlike the current provisions, there will be no need for consultation or member approval. As a result, the whole process will be simpler and cheaper, which we believe will be widely welcomed.
	Giving schemes flexibility is important. That is why, under the employer route, employers will have the right to propose bespoke nomination and selection arrangements for their schemes. The proposal must provide for a minimum of one-third member-nominated trustees, but the provisions are more flexible and for that reason must be approved by the members. We do not want to disrupt existing arrangements, which is why for many schemes the employer route will be the only way to do this. There will be more scope for the employer to determine the selection arrangements under this route. But the final choice will be made from individuals who have been nominated by scheme members, and the proposal will be adopted only if the members agree. The employer will be required to consult scheme members under a statutory consultation procedure similar to that currently in force. However, we need to look carefully at the matter to see whether it can be improved in any way. Under the new provisions, employers will no longer be able to opt out altogether. Therefore, every scheme will have member trustees, whichever route is used. Our first priority is to get member trustees in every scheme.
	We thought long and hard about whether we should make a special case for pensioner trustees. In the consultation paper Strengthening the Pensions Framework we proposed that there should be a pensioner trustee in large, mature schemes. This generated a good number of responses, some supportive but most not. Most concern centred on the fact that in law all trustees have the same roles and responsibilities in respect of all the members. There was a real danger that we would have been seen to suggest something different. On balance, we decided not to do anything which suggested that any trustee had a representative role, and to focus on our main priority of ensuring that every scheme had members on the trustee board. Who those members should be, and whether they should be active, pensioner or deferred members, is something that is best left to the trustees and scheme members to determine. They know the scheme better than anyone; it is not for government to decide. I do not know what kind of schemes my noble friend has in mind for inclusion within a "prescribed class", but I suspect that it may be the larger, more mature schemes where there is a significant proportion of deferred and pensioner members.
	Amendments Nos. 144 and 147 go further and make special provision for deferred members as well as pensioners. I am aware of concerns that sometimes deferred members are overlooked. This concern is highlighted by the fact that changes in the labour market mean that there are increasing numbers of deferred members with significant stakes in the scheme. But we also have to think about the practical consequences. Many deferred members have simply lost touch with their scheme or have only limited rights under it. We believe that the trustees are in the best position to determine the matter. I doubt that those responsible for running pension schemes would thank us for the consequences of Amendments Nos. 148 and 152. They make no allowance for the membership profile; they could have very few pensioner members or active members.
	I remind the Committee that the Government have worked very closely with the pensions industry and other groups, including OPRA and the TUC, to produce these changes which will give members greater participation and confidence in their pension schemes and, at the same time, will make arrangements for the nomination and selection of member-nominated trustees easier to operate. These proposals, which we believe are a sensible and measured response, have been widely welcomed and represent a real strengthening of the pensions industry.
	Under the trustee route, the new provisions would provide equal status for active and pensioner members. Under the employer route, the employer will be able to propose his own nomination selection arrangements to suit the circumstances of the scheme. The price of additional flexibility is that the proposal has to be put to the members for approval. If pensioner members feel that they are being treated badly, they will have the opportunity to voice their objection.
	In the light of what I have said, I hope that my noble friend will feel able to withdraw the amendment.

Baroness Turner of Camden: I thank the Minister for that comprehensive reply. It is plain that the Government have given serious consideration to the issue of pensioner trustees. I am sorry that, nevertheless, they have come to the view on balance that it is probably not a good idea. I am not sure that I agree. Although I accept that trustees do not have a specifically representative role, nevertheless it appears to employees and to members of the scheme that they have put forward individuals who, without being specifically representative, would bear in mind the concerns of the people who put them there.
	However, it is not my intention at this point in the proceedings to test the feeling of the Committee. I shall consider carefully what the Minister said. I am glad that the Government have given serious consideration to the issue and probably continue to do so. I hope that their minds will change in the future and, perhaps through general good practice, and so on, large schemes will be persuaded that it is in their interests ultimately to have representatives of pensioners on their board. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dean of Harptree: moved Amendment No. 144A:
	Page 38, line 23, at end insert ("; and
	( ) after paragraph (b) there shall be inserted ", and
	(c) that those arrangements provide for all members of the scheme, that is to say, active, deferred and pensioner members, to have equal rights of nomination and selection for member-nominated trustee seats."").

Lord Dean of Harptree: The amendment is similar to Amendment No. 144 moved by the noble Baroness, Lady Turner. I agree with everything she said. My amendment goes a little further, but the principle is the same. I am indebted to the National Federation of Post Office and BT Pensioners for the amendment. I declare an interest. I am an unpaid pension trustee and an occupational pensioner.
	The Pensions Act 1995 introduced the requirement for member nominated pension trustees for occupational pension schemes. However, in practice there have proved to be too many opt-out provisions. The Government deserve great credit for pushing forward the frontier in the Bill, but I agree with the noble Baroness that they do not push it forward adequately enough as regards pension trustees.
	The Minister, as I expected, argued that pensioners should not be trustees because they are pensioners. I agree that it is the job of pensioners to look after the interests of everyone concerned and not just one particular group. It is their job to look after all interests and not just the group to which they belong.
	However, that argument could apply equally to employee pensioners. So I do not regard that argument as having much validity. The principle that we should apply here is that all those involved in pension schemes--employers, employees, pensioners and deferred pensioners--should have a say in the running of their schemes. As the noble Baroness also said, pensioners should also have equal rights of nomination and selection with active members. I say that for two reasons. Pensioners are out of sight and therefore can be easily out of mind. Employee trustees are on the spot. They can make their personal representations. They are often represented by professional organisations or trade unions. In many cases, pensioners have no organisation for themselves and, even if they do, their members will be scattered about the country. Therefore, they would be at a big disadvantage if a Bill allowed trustees to establish constituencies of members for nomination and selection procedures. In those circumstances, it would be very difficult for pensioners to organise the nomination and selection.
	I know that the Minister's heart is in the right place on this matter. I hope that she will consider again those practical points and will recognise that there could be a big loophole so far as concerns effective representation for pensioners. I beg to move.

Baroness Turner of Camden: For some reason, Amendment No. 144A has been grouped with Amendment No. 145, which is similar to an amendment that I drafted. I believe that Amendment No. 145 should have had my name to it, and perhaps I may say a few words about it.
	The purpose of the current legislation is to ensure that members' views are represented on trustee boards and that not all trustees are appointed by the employer. The whole purpose of legislation could be undermined by leaving the door open to an employer to have a say on the selection of member trustees. The legislation addresses those employers who have been most determined to resist members having even a minority say in the running of their schemes. The next line of defence for employers who wish to resist having member-nominated trustees would be to try to get member trustees of their own choosing rather than those chosen by the scheme members.
	Even under the proposed statutory route, the outline proposal allows an option under which employers can be represented on a selection panel for member trustees provided that they are in a minority. The presence of a senior company figure and the control of proceedings by the company-appointed pensions manager clearly has the potential to allow an employer considerable influence over the outcome. Amendment No. 145 makes it clear that member-nominated trustees must be selected only by the members, without influence by the employers.

Earl Russell: I hear what the noble Baroness, Lady Turner of Camden, says about independence from the employers. It is a key point. I can remember one or two cases that we discussed in this Chamber where that independence had not in practice appeared completely obvious. I hear also what the noble Lord, Lord Dean of Harptree, says about constituencies. However, a trustee should, by definition, be trusted. One way or another we must ensure that.

Lord Hoyle: I shall be brief in my support of Amendment No. 145. I believe that it would be totally wrong if the employer had any part whatever in the selection of member-nominated trustees. Certainly, I believe that they should be selected only by the members. As has been said quite rightly, if they did have any say, it would not be long before they nominated the trustees themselves. It would remove the rights of the members. Much pressure is already put on trustees at the moment. It is certainly true that sometimes they are intimidated by the presence of senior employers who also sit on the board of trustees. Therefore, I feel that it is only right that the members, and the members alone, should have the right to select member-nominated trustees.

Baroness Hollis of Heigham: This group of amendments covers some of the more detailed aspects of the new member-nominated trustee selection provisions. Amendment No. 144A would provide that all active, deferred and pensioner members are given equal rights in the nomination of member-nominated trustees and directors. That would apply equally to the trustee route and the employer route.
	Perhaps I may recap briefly. Under the trustee route, all active, deferred and pensioner members will be able to stand for nomination. All active and pensioner members will be guaranteed the right to make nominations. Deferred members will be invited to make nominations if the trustees so decide.
	I believe that I explained in a previous amendment why we consider that trustees are in the best position to decide the extent to which deferred members should be involved. Under the trustee route, trustees will have some flexibility to determine the selection process. This will include the possibility of using selection panels to make the final choice if there are more nominations than vacancies. This amendment will effectively outlaw the use of selection panels.
	As I said before, and I think we should take it seriously, we do not want to disrupt existing arrangements unnecessarily. At the moment where there are more nominations than vacancies, many schemes use selection panels to make the final choice and it works very well. It means a group of individuals with a good understanding of the circumstances of a particular scheme can come to a view on the best person for the job. We do not see any reason to put schemes to the trouble and expense of changing their existing arrangements unnecessarily.
	The second route is the employer's own scheme route. This amendment would severely limit the scope for an employer to propose the nomination and selection arrangements of his choosing. Our proposals already make the most important limitations. They insist that they must provide for at least one-third member-nominated trustees, and they require the proposals to be put to the members for approval. They also provide for all active, pensioner and deferred members to be eligible to stand for nomination.
	Further restrictions are, I believe, unnecessary. Indeed, the flexibility that is such an important feature of the "employer route"--so that, for example, a trade union might be able to nominate people, as opposed to the trustee route where it would have been appropriate--would be completely lost. This is something we do not want to do, nor should we do. We want flexible arrangements here. I know that the Committee will appreciate that.
	Amendment No. 145 would prevent anyone other than members or their representatives from being involved in the selection of member-nominated trustees.
	Under the trustee route which I have already described our provisions are not very different from the amendment. However, they are more flexible and less disruptive. As I have already said, they will provide for the final selection to be made either by means of a ballot of the members or by a selection panel. We will be consulting on the details of the regulations in due course, but the intention is that if selection panels are used, they must comprise a majority of scheme members or their representatives. That seems to be the crucial safeguard. One either goes to a full ballot of all members or one goes to a selection panel in which the majority of the members on that panel are scheme members or the representatives and not the employers.
	This amendment, on the other hand, would require that all the members of the selection panel must be member representatives. We see no reason to be quite so prescriptive.
	Under the employer route, employers will have the right to propose bespoke nomination and selection arrangements for their scheme. The proposal must provide for a minimum of one-third member-nominated trustees, but the provisions are more flexible and for that reason must be approved by the members. It is certainly the case that there will be more scope for the employer to determine the selection under this route. The final choice will be from individuals who have been nominated by scheme members. Most importantly, the proposal will be adopted only if the members have agreed to it.
	Although the amendment would have much the same effect as our proposal, it would force many schemes to change their arrangements for no good reason. We think we achieve the flexibility without undermining the key aim of getting member trustees on to the boards.
	Amendment No. 149 is about informing and consulting members. It would introduce a regulation-making power requiring trustees to inform and consult members and former members in a prescribed manner about the effect of the arrangements they are required to make under Section 16 of the Pensions Act as revised by Clause 42.
	As the amendment points out, it will be relevant only if the employer is not making a proposal under Section 18A. As I have already made clear, employers will no longer be able to opt out from having member-nominated trustees. Every scheme will have member trustees. That is our main priority. We are trying to keep down complexity and cost. That is why we have provided the two routes, the trustee route and the employer route, for putting member-nominated trustees into place. Schemes using the trustee route will have to follow a statutory framework that will ensure that all are treated fairly and, as a result, the whole process will be significantly cheaper and simpler than the employer route. However, the employer route has the greater flexibility. So, as it does not give the same guarantees, it is only right that proposals should be put to the members for approval.
	However, I do not want to misrepresent the amendment. I do not believe it is asking for member approval in the way I have described for the "employer route". I think the intention is simply to make sure that members are given the opportunity to have a say and to be kept properly informed. We have no argument about that. I am a little concerned about putting a requirement on the face of the Bill.
	The trustee route meets two important aims. It is fair to members and it is simple to devise, and I do not want us to stray from that if I can avoid it. We intend to make regulations that will require schemes to document their member-nominated trustee procedures to make them available to members. We are also planning to require trustees to set out the procedures in the Annual Report. It will be an unnecessary burden to insist on member consultation on something that is bound by a statutory framework.
	I turn now to Amendment No. 153. This amendment inserts the words,
	"in relation to that company",
	into Section 18(8) of the Pensions Act. Perhaps I may explain exactly what that is all about. In a situation where a company is trustee for more than one scheme--for example, where an employer runs two pension schemes, but uses the same trustee company for both--the member-nominated director provisions would require that the members of each scheme would be entitled to nominate one-third of the directors of the trustee company.
	Clearly that would not work well if we left it alone. For example, how would a company that is trustee for, for example, four schemes be able to have four-thirds of its directors nominated by the members? The only practical way to deal with this in legislation is to add the memberships of the various schemes together so that they get to nominate one-third of the directors collectively.
	Having said that, we also recognise that there will be situations where the company wants to keep the memberships separate. So what we have effectively done is leave the choice to the trustee company. The default is to aggregate, but the option is there not to.
	Where the trustee is a professional trustee company acting for several different schemes run by different employers, I suspect that they choose to avoid the situation altogether by setting up separate companies for each scheme. That seems to me to be a very sensible approach.
	My legal advisers tell me that the amendment will not have any material effect on the clause as drafted and I hope this brief explanation will reassure noble Lords that this amendment is not necessary.
	Finally, Amendment No. 154 would introduce a new regulation-making power into Section 125 which would determine who is to be treated as a qualifying member. The expression "qualifying member" appears throughout the revised member-nominated trustee provisions as amended by Clauses 42 to 45 as a result of the Welfare Reform and Pensions Act 1999. We are simply carrying these changes through into the new member-nominated trustee provisions.
	The reason for replacing "member" with "qualifying member" is to provide a legal mechanism whereby only active, pensioner and deferred members are involved in the member-nominated trustee process. Members whose only rights derive from a pension share on divorce will not be included. This maintains the existing policy that only members with a connection to the scheme through employment should be involved in the nomination and selection of member-nominated trustees. Therefore, we do not need separate regulations to deal with that point.
	In the light of those explanations of what are really very technical amendments, although it seemed important to put those explanations into Hansard so that companies could see what we are determining or proposing, I hope that the noble Lord will feel able to withdraw his amendment this evening.

Lord Dean of Harptree: I greatly admire the stamina of the noble Baroness, although I do not quite go as far as that in relation to the arguments that she has used.
	I do not intend to argue the toss at this hour of the night, nearly midnight. I shall study carefully what the noble Baroness said and, if necessary, return to this very important subject. I believe that she has underestimated the practical difficulties involved for pensioners in achieving effective representation. I may well return to this matter at a later stage, but in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 145 not moved.]

Baroness Turner of Camden: moved Amendment No. 146:
	Page 38, line 33, at end insert--
	("(5A) In subsection (6)(b) for "one-third" there shall be substituted "one-half."").

Baroness Turner of Camden: The purpose of the amendment is to ensure that at least 50 per cent of trustee boards are member-nominated trustees rather than the one-third currently in legislation.
	The general conclusion on member-trustees is that they improve the working of trustee boards, both by their input and by ensuring that trustee boards conduct their business in accordance with pensions legislation. They also add to employee confidence in pension schemes, which was, of course, rather badly shaken by the Maxwell scandal.
	Many large firms have operated for years with a 50 per cent member trustee board; for example, British Aerospace, Prudential, Rolls Royce, Shell, Unilever and many others. I understand that the Government themselves--and we heard something about that this evening--favour 50 per cent, as does the NAPF, but there is a reluctance to make it a statutory obligation.
	I believe that the main concern expressed about giving member trustees parity is that employers fear that they will lose control of the cost of their schemes. But, of course, trustees can normally improve member benefits only if the employer agrees. Moreover, unions have long understood the difference between negotiating terms and conditions, including pensions, and representing beneficiaries' interests in a pension scheme. They are quite different functions.
	It is true that trustees control investment policy but they must, in any event, act in accordance with the best professional advice available. I think that the time has come to make 50 per cent a statutory requirement. I hope that the Government will move towards that this evening. I beg to move.

Lord Hoyle: I too support the amendment which is extremely sensible. If large companies do not fear 50 per cent of the members of the board being employee trustees, I do not see why the Government are so fearful of making it a statutory requirement. As has rightly been said, particularly after Maxwell, many employees have little confidence that schemes will be administered sensibly and in the interests of employees. In many cases, employees regard pensions as salaries that have been rightly deferred for the benefit of members. I believe that the way to ensure that their confidence is retained is by way of a statutory 50 per cent membership. I cannot see why the Government are hesitating when so many large firms find this to be a practical and reasonable proposition.

Lord Dean of Harptree: I believe that this is a good advance on the present practice. I support the amendment.

Baroness Hollis of Heigham: I am intrigued by all this support for proposals which, as I recall, were bitterly opposed when we debated the 1995 Act, when my noble friend, with support from me, tried to press many of these points.
	I sympathise with the amendment. However, our priority is to get members on the trustee boards of all occupational pension schemes. As my noble friend Lord Hoyle stated, some schemes already have 50 per cent member-nominated trustees, and I applaud that. However, I do not believe that the exact proportion is as important as getting some members on to every board. The schemes we are proposing will have at least one-third.
	Having ordinary members on the board is not about having individuals to represent the interests of scheme members; nor is it about creating a voting block to balance the power of employers. It is about bringing a different set of skills and experiences to bear and about providing board discussions with a different perspective.
	All trustees have the same responsibilities to run the scheme in the interests of the beneficiaries; a point made by the noble Lord, Lord Goodhart. I believe the overwhelming majority of trustee boards work together in that way for the interests of members as a whole. Indeed, I believe that trustee decisions are rarely made by anything other than complete consensus.
	I have no issue with the principle of 50 per cent member-nominated trustees, but I think it would be an unfair burden on business to require it now. I hope that my noble friend will agree that it is important to work with the industry, particularly after we have gone against the wishes of the industry earlier tonight, at least temporarily. We may therefore need to do even greater work with industry in order to overcome some of the problems we dumped on it in an unfriendly way tonight. I hope that we shall work with the pensions industry and sponsor employers to continue to encourage good quality occupational pension schemes.
	Like my noble friend, we believe that ordinary scheme members add real value to trustee boards and we want to see more of them. We have worked with the industry to develop these new arrangements. We believe that they represent a real step forward. With that in mind, I hope that my noble friend will feel able to withdraw the amendment.

Baroness Turner of Camden: I thank the Minister for her explanation of the Government's policy as regards statutory requirement. However, I had the impression that she was sympathetic to the points put in our argument.

Baroness Hollis of Heigham: Absolutely.

Baroness Turner of Camden: Nevertheless, there is no point in prolonging the argument at this time of night. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 147 to 149 not moved.]
	[Amendment No. 150 had been withdrawn from the Marshalled List.]

Baroness Turner of Camden: moved Amendment No. 151:
	Page 39, line 24, at end insert--
	("(10) The Secretary of State shall make regulations providing that all trustees should be required to have attended an approved training course explaining the role and responsibilities of trustees within six months of being either elected as a member-nominated trustee or appointed as a trustee by the scheme's sponsoring employer.
	(11) These regulations shall also prescribe the content of such an approved training course.
	(12) The failure of a trustee to attend such a course within six months of being either elected or appointed as a trustee shall nullify the trustee's election or appointment.").

Baroness Turner of Camden: Amendment No. 151 stands in my name, that of my noble friend Lord Hoyle, and other noble Lords.
	The amendment concerns the training of trustees. As we all know, pension provision has become a rather complicated matter. Successive governments have introduced legislation with the laudable aim of protecting beneficiaries, but the result has often been to add to the complication. Owing to the reforms introduced by the previous government in the wake of the Maxwell scandal, there is now an obligation for occupational pension schemes to make provision for employee trustees. We discussed that earlier this evening.
	Pension fund trustees are expected by the employees who elect them to look after the interests of beneficiaries. They will be held responsible in the eyes of employees for anything that goes wrong. The trustees will be held to be accountable and they must also ensure that--to use another frequently used term--there is transparency. So trustees need to be familiar not only with their own scheme rules but also with the legal requirements. They must know when to seek advice and where to get it.
	Employees must have confidence in their scheme and the way in which it is administered. Unfortunately, despite the very good record of occupational pension schemes--they are the reason why many pensioners are able to live in rather more comfort than they might otherwise be able to do--that trust has been sorely dented by scandals such as the Maxwell affair. The recent legislation has been designed to try to restore confidence and employee trustees play an important role in that regard.
	The idea that trustees should be trained has the support of unions and employers. The text of this amendment has been supported by unions, in particular my own, MSF, and also by the Engineering Employers Federation. Many organisations offer courses of a high standard. Unions do so as well. My union has its own residential college at Bishops Stortford and training courses have been available there for some time.
	Furthermore, it is not only employee trustees who need to be trained. Management normally nominates trustees, and they may well be people who hitherto have had little to do with pension provision. It is therefore necessary for them to be trained as well.
	Unions well understand the difference in function between those nominated and elected as trustees and union representatives with the duty of negotiating terms and conditions. Our training course makes this difference quite clear. Trustees have an obligation to act for all beneficiaries and are not concerned with negotiating terms and conditions. They are quite separate functions.
	I hope that the Government will feel disposed to accept this amendment. If for any reason the wording is not acceptable, perhaps the Minister will accept the principle here and come back with an alternative form of words on Report. I beg to move.

Lord Hoyle: Again I shall be extremely brief, since it is now past midnight. The amendment is also tabled in my name, along with those of my noble friend and the noble Lords, Lord Higgins and Lord Astor.
	I wish to support the amendment because training is absolutely necessary. Pension provision is a difficult and complex matter and, as has rightly been said, to perform properly as a trustee you must understand the workings not only of your own pension fund but of others. You need to understand its aims and how investments work. It is vital that training is given not only to those nominated by members but also to those representing employers, so that all concerned will have the necessary expertise and skill to administer pension funds in the interests of all their members.

Lord Astor of Hever: I am happy to support the amendment moved so effectively by the noble Baroness, Lady Turner. The role and responsibilities of the trustees of occupational pension schemes are becoming increasingly onerous. As the noble Baroness, Lady Turner, and the noble Lord, Lord Hoyle, rightly pointed out, their work is increasingly complicated.
	There is a danger that enthusiastic amateurs could be elected without being fully aware of their wider responsibilities as trustees. It is therefore critically important that they understand their role in sufficient depth. Members of occupational pension schemes should not be expected to hand over the future security of their pensions, which are probably one of the most important financial investments that individuals will ever make, to those who have not been properly trained to deliver with due care. The members of occupational pension schemes should have the same guarantee of customer care and a proper understanding of the issues as they would expect and demand from every other part of the financial services industry.
	For those reasons, we add our full support to this amendment.

Lord Dean of Harptree: Those of us who have been pension scheme trustees for some years will recognise the enormous additional responsibilities and financial obligations which are now to be placed on pension trustees. Those of us involved in the last amendments, from all sides of the Chamber, are anxious that those on pension trustee boards should be more widely representative than they are at the present moment. This conveys to me clearly that training is not only advisable but also necessary. So I am glad to support the noble Baroness in her amendment.

Lord Goodhart: I too support the principle behind the amendment. I am a little concerned with the form of the drafting because some employers have a number of different trust funds and may wish to appoint the same individual successively as a trustee of a number of those funds. It might in that case be inappropriate to require somebody who has already been on a training course to go on a further one. Subject to that point, the principle is absolutely right.

Baroness Hollis of Heigham: Almost everybody in the Chamber spoke in favour of the amendment tonight except, alas, myself.
	Amendment No. 151 would require all trustees to attend an approved training course within six months of being appointed or face removal. It would also require the Government to prescribe in regulations the content of such training. I sympathise with the spirit of the amendment. I accept that trustees have the job of the proper running of the scheme. It is vital that they have a full knowledge of what is expected of them and for that they need to be trained. In that regard we are at one with the amendment; that is, we all agree that trustees need adequate training to carry out their responsibilities. The question is whether, from what we currently know, given the wording of the 1995 Act, that training should be compulsory and what form it should take.
	The present law stops short of making training compulsory, but it does make it a requirement that employee trustees are given paid time off to undertake training. Trustees who are employees of the sponsoring employer, that is the majority, have the right to that paid time off and it is important that they exercise that right and obtain the training that they need. If they do not, they will not be serving the best interests of their scheme, the employers, the members, or anyone involved in the scheme. So it is in everyone's interests to make sure that they are properly trained, and the substantive proposal in the 1995 Act was that they should have paid time off to receive that training. So there is no bar to that.
	Whether it is appropriate to go to the lengths proposed by these amendments is another matter. There is already a great deal of quality training available for trustees. Many trustees take advantage of that training. The Pensions Management Institute holds a list of 38 providers of trustee training and so forth. The Pensions World magazine listed 27 providers who last year provided training for over 3,700 trustees. There has been an increase in demand for training since 1998.
	Those not trained, or who are not coming forward, so far as the research suggests, are those who have already been a trustee for a long period of time and are very experienced; they already have relevant experience in being a trustee; or they are essentially trustees for a scheme managed by a professional insurance company and only in a few cases would they appear to be under pressure of time or lack of interest.
	I could go on. As I say, it is clear that many schemes already have a good record on trustee training. There are encouraging signs that further progress is being made and more training is being made available. As I say, the Committee made it clear that there is agreement throughout the Chamber and I am willing to take the amendment away and consult further with the industry. My advice is that employers will oppose the extra costs and are hostile to it. It may be that the industry has a different view. If it feels it is appropriate to explore this further, I am willing to do so. I entirely accept the spirit of the amendment.
	As I say, when I come back I may say that we have taken advice, that we have consulted but do not feel, to use the old-fashioned phrase, that the time is right to make it compulsory. But I am willing to ask the officials to explore this further, given the opinions throughout the Chamber tonight.

Baroness Turner of Camden: I thank my noble friend for that response; it is one of our victories this evening.
	I am pleased that my noble friend is going to consult. The text of my amendment--I obtained it from my union--was originally drafted by the Engineering Employers' Federation so I imagine that some employers will be quite amenable to the suggestions made in the amendment. I am grateful for my noble friend's assurance this evening and, with pleasure, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 42 agreed to.
	Clause 43 [Corporate trustees]:
	[Amendments Nos. 152 and 153 not moved.]
	Clause 43 agreed to.
	Clauses 44 and 45 agreed to.
	[Amendment No. 154 not moved.]
	Clause 46 [Information to be given to the Authority]:
	[Amendment No. 155 not moved.]
	Clauses 46 and 47 agreed to.
	Clause 48 [Reports about winding-up]:
	[Amendments Nos. 156 to 160 not moved.]
	Clause 48 agreed to.
	Clause 49 [Directions for facilitating winding-up]:
	[Amendments Nos. 161 and 162 not moved.]
	Clause 49 agreed to.
	Clause 50 [Restriction on index-linking where annuity tied to investments]:

Baroness Turner of Camden: moved Amendment No. 162A:
	Page 54, line 40, after ("satisfies") insert ("the conditions mentioned in subsection (1A) and").

Baroness Turner of Camden: In the absence of my noble friend Lady Dean, I have undertaken to ensure that this amendment is moved. The proposal to raise the age at which pensioners are obliged to use their pension funds to buy an annuity from 75 to 80 has to be welcomed as indicating that the Government are aware there is a problem surrounding annuity purchase, but it does not solve it. It can only help pensioners with very large funds, who can use the income drawdown arrangements. But they still have to hand over the remaining pension fund to the life office to buy an annuity, perhaps shortly before death. Most pensioners cannot afford to delay annuity purchase, so postponing the decision until 80 does nothing to help them.
	The problem with annuity purchase is not just low annuity rates. That might change in the future. The obligation to purchase an annuity locks an individual into a lifelong and unchangeable contract at a particular point in time. With increased longevity, funding the annuity is increasingly difficult for life offices and reduces the returns on annuities. It is also far too inflexible because annuitants are required to use all of their pension fund for this purpose.
	In view of the Government's desire to encourage more people to save for their own retirement, the Government should seek to provide potential savers with a much more attractive prospect--retaining control over at least a portion of their pensions funds. On retirement, the individual should only be obliged to purchase an annuity which will provide him with sufficient income to avoid state support until the end of his life, thus fulfilling his obligation to the state. The Retirement Income Working Party suggested that the level of weekly income should be set at £140 a week, including the basic state pension for a single person. For a man aged 65, the annuity purchase for an index-linked pension of about £70 a week would cost about £55,000.
	Under this text, pensioners would be free to invest the remainder of their funds, subject to the appropriate tax regulations, bearing in mind that tax relief has been provided to enable them to save. The financial services industry would have an incentive to develop new products to provide income in retirement. I beg to move.

Lord Higgins: The reason for my not pursuing this point is that it seemed to me to be very late at night to engage in a discussion on an amendment of such importance. However, the views on this side of the Committee are well known; indeed, new developments in this field need to be taken into account. For example, the £55 billion windfall that has come into the Government's hands as a result of the mobile phone situation may alter the position in financial markets quite considerably. It remains to be seen whether, on the one hand, the Government use that money for debt repayment. That would obviously affect annuity rates, which would not be to the advantage of pensioners. On the other hand, given the increasing trend in pension funds to include in their portfolio corporate as well as government bonds, it remains to be seen whether that £55 billion will anyway be offset by the phone companies themselves having to raise the finance in the form of corporate bonds. These are complex issues.
	I imagine that the noble Baroness is not proposing to press the amendment to a vote at this stage, even if she might win! It seems to me that the amendments tabled by the noble Baroness are, in many respects, rather more sophisticated than that which I, being a simple soul, had tabled. It is important to maintain people's ability to keep their incomes as pensioners above income support level. However, I hope that, subject to what the Minister says, we might return to this important matter at a later stage.

Lord Goodhart: I hesitate to become involved in a discussion about the philosophy behind tax relief on pensions at this stage of the night. However, I am somewhat concerned about the matter. It has always seemed to me that the purpose of tax relief on pensions is to provide a fund which is basically for the benefit of the pensioner and the pensioner's widow or widower. Once the pensioner--whatever age he or she reaches--is not required to use the whole of the fund for his or her own consumption, there is considerable scope for tax avoidance, particularly in the case of wealthier pensioners. One obtains the benefit of the funds and one can hand them onto other members of one's family with the benefit of the tax relief which one has not used oneself.
	The amount of tax relief that is available on pensions contributions in this country is extremely large, compared with tax relief in other countries, or indeed compared with tax reliefs available in this country on ISAs. As I say, I am somewhat concerned about this matter. I can see that other measures could be taken, such as allowing funds to be invested in something other than strictly an annuity. I shall not go into the matter any further tonight but I am somewhat concerned about the amendments.

Baroness Hollis of Heigham: I am tempted to ask whether I can support the noble Lord, Lord Goodhart, and sit down again. I thought that he expressed admirably the concerns about this matter.
	Clause 50 gives members of defined contribution occupational pension schemes the option of using the non-protected rights element of their accumulated pension fund accrued from April 1997 to buy an investment-linked annuity instead of an index-linked annuity. The clause also provides for a power to prescribe the conditions which investment-linked annuity products must satisfy.
	I feel that I cannot deal with this matter quickly as it is such a substantive item. If we do it at all, I have to spell out the reasons for the Government's position. I had hoped that we might defer the matter to Report stage, but the Committee has decided otherwise.
	We issued a public consultation document seeking views on whether greater flexibility should be allowed so that members of money purchase schemes could choose to buy either an investment-linked annuity or a traditional index-linked annuity to satisfy the indexation requirements. Forty responses were received, of which, 34 supported the proposal for change and welcomed the Government's willingness to recognise innovative annuity products.
	The amendments have a number of intentions aimed at changing the current rules on annuity purchase for tax-approved pension schemes. Amendment No. 163 is intended to remove the existing requirement for pension funds to be used to purchase an annuity by the time of the member's 75th birthday at the latest.
	Amendment No. 162A seeks to specify on the face of the Pensions Act 1995 as to the type of investment linked annuity products which may be purchased and is directly linked to Amendment No. 162B. Amendment No. 162B seeks to require that money purchase pension funds should be used to provide only an annuity of £70 per week and that figure would be subject to annual increases in an attempt to ensure that the annuitant would not qualify for income support. The balance of the pension fund would be invested so that it was not subject to income tax, and any withdrawal of capital or income from the fund would be subject to income tax at the highest marginal rate of the fund holder.
	Defined contribution pension schemes, such as personal pensions and the new stakeholder pensions--money purchase-- are based on the idea of building up a fund from contributions made while the member is working. The fund can then be used to provide a pension income in retirement. Annuities convert capital into an income guaranteed to continue in payment for life. They are the only product that can do this. However, there is a wide range of annuity products available on the market to suit individual needs-- including investment-linked annuities, which allow annuitants to benefit from possible investment growth in the future. I stress that lifelong payment is a feature of all types of pension annuity. That is an important point.
	Annuities pool risk. Those who die younger are, by definition, cross-subsidising those who live longer. As those who, for whatever reason, suspect that they may die younger and avoid annuities, the average age of those who remain lengthens and annuity rates have to fall to cover them. An annuity then becomes a less attractive buy for persons with average life expectancy, so the non-virtuous spiral continues.
	The income draw-down facility allows members to defer annuity purchase if they wish, while drawing an income from the capital of the fund, which can remain invested in stocks and shares, but which must stop at the age of 75. It is high risk and high cost. We calculate that it works only if one has a fund of at least £200,000 per year. Some experts give a slightly lower figure.
	The noble Lord, Lord Goodhart, was absolutely right. Tax-approved pension funds benefit from valuable tax privileges at substantial cost to the Exchequer. Those incentives are designed to help people to obtain an adequate pension in retirement, not to provide a highly tax-privileged way to make investments of a general nature to produce a highly privileged way of producing an inheritance for others subsequently to enjoy. It is right for the Government to have an interest in the use of pension funds after retirement to ensure that they do provide a pension through retirement as intended.
	We have heard much about the apparently poor value that annuities represent. I accept that rates have fallen in recent years but that is partly due to the money illusion. The stable economy provides scope for sustained growth in pension funds, and lower inflation means that an annuity will buy more. Since 1990, annuity rates have fallen by just over one-third. Inflation has fallen by well over two-thirds, while the FT30 has doubled. We are experiencing a lower return on a double-sized fund to meet an even lower level of inflation. Explained that way, people would be hard-pushed to argue that an annuity currently at around 9 per cent for a single male age to 65 with a five-year guarantee is unacceptable.
	Amendments Nos. 162A and 162B seek to remove the current requirement to use the whole of a tax-approved defined contribution fund to buy an annuity. The amendments would require that an income of only £70 per week should be purchased as an annuity, subject to annual increases. That appears to be to prevent the pensioner having to fall back on income support.
	The amendments have a similar objective to the proposals in the Retirement Income Working Party report. We are considering those points, but we need to assess the full implications of requiring people to buy an indexed annuity from their personal pension fund. Many factors need to be taken into account. We are giving serious consideration to whether that is a useful approach. Those are not empty words. Treasury, Inland Revenue and DSS officials are reviewing the Government's position but we need to be sure that any change is an improvement on the present position.
	Annuities provide a guaranteed income for life. They are by no means poor-value products, as some people like to suggest--especially in the low-inflation environment that we are committed to maintain. The annuity purchase rules, as they relate to tax approval, are contained in the Income and Corporation Taxes Act 1988. Amendments to that legislation would fall outside the scope of the current Bill. The Government are actively considering the rules in question, and in light of my explanation, I hope that my noble friend feels able to withdraw her amendment.

Baroness Turner of Camden: I thank the Minister for that lengthy explanation. It has fulfilled the requirements of myself and my noble friend Lady Dean. She has not been able to be in her place this evening and I promised that I would move the amendment. We were anxious to get on record the view of the Government on what we consider to be a serious matter. As the noble Lord, Lord Higgins, said, it is inappropriate to start discussing a matter of such complexity at this hour of the morning. We shall examine in detail what has been said and consider whether or not it is worth raising the whole issue yet again on Report. In the meantime, having thanked the noble Baroness, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 162B not moved.]
	Clause 50 agreed to.
	[Amendment No. 163 not moved.]
	[Amendment No. 164 had been withdrawn from the Marshalled List.]
	Clause 51 [Information for members of schemes etc]:
	[Amendment No. 165 not moved.]
	Clause 51 agreed to.
	Clause 52 agreed to.
	Clause 53 [Investigations by the Pensions Ombudsman]:
	[Amendment No. 166 not moved.]
	Clause 53 agreed to.
	Clauses 54 and 55 agreed to.
	Schedule 5 [Pensions: miscellaneous amendments and alternative to anti-franking rules]:
	[Amendment No. 166A not moved.]
	[Amendment No. 167 had been withdrawn from the Marshalled List.]
	[Amendment No. 168 not moved.]
	Schedule 5 agreed to.

Baroness Amos: I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.
	House adjourned at twenty-seven minutes before one o'clock.